BOND REPORT: Treasury Yields Make Largest One-day Retreat In Two Weeks
29 March 2017 - 10:55PM
Dow Jones News
By Sunny Oh
Chicago Fed president expects 'one to two' hikes this year
Treasury yields fell Wednesday as traders snapping up U.S.
government bonds were encouraged by Fed Vice Chairman Stanley
Fischer's dovish comments on Tuesday, when he reiterated his
commitment to two more rate hikes this year, in contrast to more
hawkish remarks made by other Fed presidents on Wednesday.
The yield on the 10-year Treasury note slipped 4.1 basis points
to 2.379%, the largest one-day decline in two weeks. The yield on
the 30-year Treasury bond fell 3.8 basis points to 2.987%. The
yield on the two-year Treasury note fell 3.2 basis points to
1.274%.
Bond prices move inversely with yields, and one basis point is
equal to a hundredth of a percentage point.
"The bigger theme was that in the last couple of days, some Fed
presidents gently talked down the probability of further rate
hikes, especially with Fischer's comments," said Guy Lebas,
Janney's chief fixed-income strategist.
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. British Prime Minister Theresa May also formally
signaled the beginning of Brexit negotiations by invoking Article
50 of the Lisbon Treaty, a decision that was widely anticipated and
had little influence on the Treasury market.
"The Brexit declaration was many months in coming, so it's not
much of a surprise," LeBas said.
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.
Remarks from Boston Fed President Eric Rosengren and San
Francisco Fed President John Williams forecasting three to four
more rate hikes this year appeared to do little to arrest the
decline of Treasury yields on Wednesday.
Auctions for $28 billion worth of seven-year notes sold well,
with the ratio of bids awarded to bids received peaking above two,
a level of activity largely considered by traders as healthy.
(END) Dow Jones Newswires
March 29, 2017 17:40 ET (21:40 GMT)
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