Treasurys Decline as Added Borrowing Revenue up
21 February 2018 - 4:53AM
Dow Jones News
By Daniel Kruger
U.S. government bonds weakened before the first of four
scheduled debt auctions this week that will raise $107 billion.
The yield on the benchmark Treasury 10-year note rose to 2.904%,
according to Tradeweb, from 2.877% Friday. Yields rise as bond
prices fall.
The Treasury is also selling $151 billion of short-term bills to
help manage its cash flow as the government sends out tax refunds
and awaits payments, which tend to come in closer to the April 15
filing deadline. The government is raising the size of its bond and
note offerings to finance $1.5 trillion in tax cuts over the next
10 years. which were enacted in December.
With little new data this week, the decline in prices "is very
likely supply-related," said Thomas Simons, a money market
economist at Jefferies Group LLC. With yields rising, "people are
looking at a 3% yield on 10-year notes as something to keep an eye
on."
Investors and analysts will be looking for signals of whether
Federal Reserve officials are becoming more concerned about the
pace of inflation on Wednesday, when the central bank releases the
minutes of its meeting that ended Feb. 1. Inflation represents a
threat to the value of a bond by eroding the purchasing power its
fixed coupons.
At their December meeting, Fed officials forecast three
interest-rate increases for 2018. Some economists, including those
at JPMorgan Chase & Co., have said they expect policy makers
will raise rates four times to help limit the pace of price
increases as the economy remains robust and unemployment has
remained steady at 4.1%.
The consumer-price index rose 2.1% during the 12 months that
ended January, according to the Labor Department. Producer prices
also rose, as did average hourly earnings, which climbed 2.9% in
January, suggesting that a tight labor market is finally starting
to lead employers to boost wages.
Write to Daniel Kruger at Daniel.Kruger@wsj.com
(END) Dow Jones Newswires
February 20, 2018 12:38 ET (17:38 GMT)
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