BOND REPORT: Treasury Yields Dip, On Track For Weekly Declines
19 August 2017 - 12:34AM
Dow Jones News
By Sunny Oh
U.S. consumer sentiment at highest level since January
Treasury yields pared some of the declines but were still lower
in early trade Friday after data showing U.S. consumer sentiment
index rose to the highest level since January.
University of Michigan consumer-sentiment survey rose to 97.6 in
August from 93.4 in July and comes on the heels of retail sales
that notched a 7-month high
(http://www.marketwatch.com/story/us-retail-sales-soar-in-july-to-7-month-high-2017-08-15).
Still, the benchmark 10-year yield was on track for a weekly
drop amid global flight to safety following terrorist attacks in
Spain on Thursday and continued political turmoil in
Washington.
The 10-year benchmark Treasury yield was down by 2 basis points
to 2.175%, while the 30-year Treasury bond's yield ticked lower by
2 basis points to 2.764%. The 2-year government bond's yield edged
lower by less than a basis point to 1.293%.
U.S. bond markets remained relatively volatile during the week,
amid political drama, diverging economic data and a revealing set
of minutes from the Federal Reserve.
Dallas Fed President Robert Kaplan, a voting member, is also
slated to speak at 10:15 a.m. Eastern. The impact on markets is
likely to be muted as he has already spoken twice this week to
reporters. Both times Kaplan underlined his concerns over weak
inflation and suggested that he would need to see "progress" on
that front before he entertained the thought of a further rate
increase this year.
Much of the week's trading was driven by sharp swings in
political uncertainty as a standoff between North Korea and
President Donald Trump's administration abated only to give way to
the dissolution of Trump's business advisory councils after Trump
responded to the violence in Charlottesville, Va.
"Enough key players in Congress are stepping away from the cast
by the Trump presidency that financial markets are marking down
prospects of this president being able to achieve any constructive
objectives for tax reform, infrastructure spending or health care
reform," said Carl Weinberg, chief economist for High Frequency
Economics, in a note to clients.
Investors also scrutinized the minutes from the Federal
Reserve's July policy meeting, which showed central bankers were
finally beginning to concede that the weakness in inflation might
not be transitory. Consumer prices have remained soft for five
straight months since March
(http://www.marketwatch.com/story/us-consumer-inflation-remains-soft-in-july-cpi-shows-2017-08-11).
Bond yields dropped and equities sold off on Thursday in
response to a terrorist attack in Barcelona, which left at least 14
people dead and more than a 100 injured after two vans plowed into
a crowd in a popular tourist spot.
Elsewhere, European bond markets experience more brisk trading
on Friday as they attracted a rush of flows from investors fleeing
equities into the perceived safety of sovereign paper. The German
10-year government bond's yield fell 2 basis points to 0.405%, as
the Stoxx Europe 600 index fell 0.8% to 3042.7.
For next week, market participants would gear up for the Federal
Reserve symposium in Jackson Hole, Wyo. Both Fed Chairwoman Janet
Yellen and European Central Bank President Mario Draghi will attend
the get-together. But sources at the ECB said Draghi wouldn't
announce a major policy shift as previous rumors had suggested,
even as the eurozone's economy makes a broad, steady recovery
(http://www.marketwatch.com/story/eurozone-recovery-aided-by-dutch-surge-2017-08-16).
(END) Dow Jones Newswires
August 18, 2017 10:19 ET (14:19 GMT)
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