U.S. Government-Bond Prices Fall as 10-Year Yield Tests 3%
15 September 2018 - 2:04AM
Dow Jones News
By Sam Goldfarb
U.S. government-bond prices fell Friday, briefly pushing the
yield on the 10-year note above 3% for the first time since early
August, as investors' appetite for Treasurys was once again tested
by forecasts for higher interest rates and continued strength in
the U.S. economy.
In recent trading, the yield on the benchmark 10-year Treasury
note was 2.990%, according to Tradeweb, compared with 2.964%
Thursday. The yield reached as high as 3.001% early in the U.S.
trading session.
Yields, which rise as bond prices fall, have climbed steadily in
recent weeks, as factors that have constrained their rise --
including concerns about trade tensions and emerging-market
economies -- have receded somewhat. At the same time, forces
pushing them higher, such as solid U.S. economic data, have
remained in place.
The 10-year yield's move to 3% will bring increased scrutiny to
the bond market, with investors watching to see whether the yield
can break through a level that has previously acted as a ceiling
this year.
Treasury yields generally, and the 10-year yield in particular,
are of great importance to the global economy, serving as
benchmarks for a range of interest rates used by consumers,
businesses and governments.
The 10-year Treasury yield has moved above 3% on a few occasions
this year, only to quickly fall back down again, ensuring that the
credit environment for consumers and businesses remains relatively
favorable, even as the Federal Reserve has steadily raised
short-term interest rates.
Friday's rise in yields reflects the "near-term pressure that we
have seen on Treasurys," said John Canavan, market analyst at Stone
and McCarthy Research Associates.
If the 10-year yield can't move higher than 3% on Friday, it
will likely settle back into its summer trading range, while the
yield could test its 2018 highs if it can break through that
threshold, he added.
Investors sold Treasurys Friday despite a lackluster report on
retail sales.
Sales at retail stores and restaurants rose 0.1% from the prior
month to a seasonally adjusted $509 billion in August, the Commerce
Department said Friday. That was well below the 0.4% increase
economists surveyed by The Wall Street Journal had expected.
Still, revised data showed retail sales rose 0.7% in July, up
from an initially reported 0.5% increase.
Write to Sam Goldfarb at sam.goldfarb@wsj.com
(END) Dow Jones Newswires
September 14, 2018 11:49 ET (15:49 GMT)
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