BOND REPORT: Treasurys Pare Losses After U.K. Formally Begins Brexit Process
29 March 2017 - 3:20PM
Dow Jones News
By Sunny Oh
Investors await string of Fed speakers
Treasury prices gained some ground on Wednesday after U.K. Prime
Minister Theresa May began the Article 50 process, which formally
begins the process of taking the country out of the European
Union.
The yield on the 10-year Treasury note slipped 2.6 basis points
to 2.398%. The yield on the 30-year Treasury bond fell 2.3 basis
points to 3.006%. The yield on the 2-year Treasury note fell 2
basis points to 1.286%.
Bond prices move inversely with yields and one basis point is
equal to a hundredth of a percentage point.
"The 10-year note yield has backed off from levels that suggest
a breakout above the 2.60% is not likely to happen anytime soon."
wrote Peter Cardillo, chief market economist for First Standard
Financial, in a note, predicting Treasury yields were unlikely to
follow through on the rise seen Tuesday.
"In fact, with the formal request by Great Britain to exit the
EU this week, coupled with the upcoming French elections, yields
may be poised to hang around the present levels," he said.
See:Brexit: Here's what happens now that the U.K. has triggered
Article 50
(http://www.marketwatch.com/story/brexit-heres-what-happens-now-that-the-uk-has-triggered-article-50-2017-03-29)
On Tuesday, positive economic data took yields up as
better-than-expected readings from the consumer confidence index
heightened demand for risky assets and sapped demand for safe
government paper. But after Theresa May ended months of
anticipation on when the U.K. would begin the process to leave the
EU, investors flocked back to haven assets as one source of
geopolitical uncertainty in Europe is now concluded.
Opinion:Three ways today's triggering of Brexit will change
Britain and Europe
(http://www.marketwatch.com/story/three-ways-article-50-will-change-britain-and-europe-2017-03-29)
Chicago Federal Reserve President Charles Evans, who is a voting
member of the central bank's interest-rate-setting committee, said
he expects "one or two" more interest rate increases this year.
Evans added an inflation rate of 2.5 % "for a time" would not be
out of keeping with the Fed's plans. His remarks appeared to break
the fall of Treasury prices.
San Francisco Fed President John Williams and Boston Fed
President Eric Rosengren are also expected to speak on
Wednesday.
Traders said they were looking ahead to an auction of $28
Billion worth of 7-year notes at 1 p.m.
(END) Dow Jones Newswires
March 29, 2017 10:05 ET (14:05 GMT)
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