BOND REPORT: Treasurys See Buying As Catalan Tensions Resurface
19 October 2017 - 2:36PM
Dow Jones News
By Sunny Oh
Trump is set to meet Fed chief Janet Yellen to round off his
interviews for the next head of central bank
Treasury prices rose, pulling yields lower, on Thursday after
the Spanish government said it would suspend Catalonia's autonomy
if the region does not hold off on its independence bid.
How are Treasurys doing?
The benchmark 10-year Treasury yield fell 3 basis points to
2.308%. The 2-year yield slipped 3 basis points to 1.535%, edging
away from the 10-year high set on the previous session. While, the
30-year yield dipped 3 basis points to 2.822%. When bond prices
rise, yields fall.
What's driving markets?
Treasurys attracted solid appetite as investors flocked into
assets perceived as safe like gold and the Japanese yen. Tensions
between Spain's central authorities and the Catalan government
flared up as Spanish Prime Minister Mariano Rajoy issued an
ultimatum, saying he would trigger Article 155 and suspend the
region's autonomy if the Catalan government stayed on its current
track.
See: Standoff in Spain intensifies, as government gears up to
strip autonomy from Catalonia
(http://www.marketwatch.com/story/standoff-in-spain-intensifies-as-government-gears-up-to-strip-autonomy-from-catalonia-2017-10-19)
Investors are concerned a full-blown secession could endanger
the viability of the European Union, by encouraging other
separatist movements in Europe.
What did market participants say?
"The contagion will be a much broader affair which may bring a
second swipe at the very foundations of the European Union," wrote
Mark Grant, chief market strategist for Hilltop Securities. "Brexit
is bad enough but a second front, which I have labeled
"Cat-a-pult," could bring the entire construct to its knees."
What else are on investors' radar?
How did other assets do?
Gold rose $4.00, or 0.3%, at $1,287.10 an ounce. The Japanese
yen strengthened against the dollar by 0.4% to $112.531 The Spanish
10-year government bond yield briefly spiked to intraday highs
before returning close to break-even levels of 1.611%.
(END) Dow Jones Newswires
October 19, 2017 09:21 ET (13:21 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.