BOND REPORT: Treasury Yields Fall To Monthly Low As Chinese Equity Slump Sparks Flight To Quality
28 November 2015 - 2:23AM
Dow Jones News
By Ellie Ismailidou, MarketWatch
Treasury yields fell to their lowest levels of the month Friday
after an overnight rout in Chinese equities fueled global demand
for investments considered safer, such as U.S. government debt.
"A degree of déjà vu has returned," said Brenda Kelly, head
analyst at London Capital Group, in a note, pointing to the
late-August global stock-market plunge, when a slump in Chinese
equities fueled fears of a global growth slowdown.
On Friday, the Shanghai Composite Index recorded its biggest
one-day drop since Aug. 25, as Chinese stock regulators launched
investigations into two major Chinese brokerages
(http://www.wsj.com/articles/citic-securities-probed-by-chinas-stock-market-regulator-1448537277)
over suspected violations of securities rules.
The probes into Citic, Guosen, Founder and Haitong Securities
built on souring market sentiment after the release of lackluster
Chinese industrial data that showed that the profit made by
industrial companies in the country fell for a fifth straight month
in October, down 4.6% from the year-ago period.
"There are still no signs of recovery, with exports again acting
as a drag on growth in the third quarter, and consumers still
unwilling to spend their windfall from lower oil prices," analysts
at Capital Economics said in a note released Friday.
But in Friday's holiday-shortened trading session, the
flight-to-safety "seems somewhat confined," Kelly said, with the
sovereign-bond market getting most of the benefit.
Also read: When do U.S. markets close on Black Friday?
(http://www.marketwatch.com/story/when-do-markets-close-around-thanksgiving-2015-11-23)
In the U.S., government-bond yields declined in all maturities.
Treasury yields fall when prices rise, and vice versa.
The yield on the benchmark 10-year Treasury fell 2.1 basis
points to 2.211%, its lowest level since Nov. 3, according to
Tradeweb. One basis point is equal to one hundredth of a percentage
point.
Meanwhile, the yield on the 30-year bond , known as the long
bond, inched 1.2 basis point lower to 2.984% and the yield on the
two-year Treasury note edged 0.8 basis point lower to 0.926%.
In Europe, government bonds also got a boost, driving yields
lower, as European stocks fell
(http://www.marketwatch.com/story/european-stocks-come-off-3-month-high-as-china-woes-weigh-2015-11-27)following
the rout in Chinese equities.
The yield on the benchmark 10-year German bond known as the
bund, fell two basis points to 0.452%, its lowest level since late
October.
In the U.S., investors shifted their focus on retailers' Black
Friday sales reports. Shoppers were hitting their computers on
Thanksgiving, spending 22% more than they did last year
(http://www.marketwatch.com/story/more-than-1b-spent-online-on-thanksgiving-day-2015-11-27),
according to Adobe Digital Index.
Read: Black Friday key for retailers after lackluster
third-quarter earnings
(http://www.marketwatch.com/story/retailers-are-counting-on-black-friday-after-lackluster-third-quarter-earnings-2015-11-25).
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(END) Dow Jones Newswires
November 27, 2015 10:08 ET (15:08 GMT)
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