BOND REPORT: Treasury Yields Edge Lower As Global Stock Markets Rebound
22 October 2018 - 1:22PM
Dow Jones News
By Sunny Oh
Treasury yields were slightly lower on early Monday trading as
investors watched stock markets rebound across the world.
The 2-year note yield was mostly flat at 2.905%, near its
highest levels in a decade. The 10-year Treasury note yield was
down 0.8 basis point to 3.194%, while the 30-year bond yield fell
1.2 basis points to 3.373%, near its more than four-year high of
3.401%. Bond prices move in the opposite direction of yields.
The rebound in stocks was led by the biggest rally in Chinese
equities
(http://www.marketwatch.com/story/stock-futures-point-slightly-higher-as-china-equities-rise-earnings-in-focus-2018-10-22)in
three years after regulators worked to reassure investors last week
amid concerns of a trade war and slowing growth. China's central
bank and government pledged to support the economy after
third-quarter growth hit a nine-year low of 6.5%. The Shanghai
Composite finished higher 4.1% on Monday.
U.S. stocks looked to open higher with futures for the Dow Jones
Industrial Average and the S&P 500 up by around 0.4%.
Looking ahead, investors will digest around $108 billion of
short-dated government paper this week. Analysts say the burgeoning
supply hasn't overwhelmed appetite for long-term Treasurys, but may
have contributed to the relentless rise of short-end yields this
year. Coupled with the Federal Reserve's gradual but steady rate
hike trajectory, short-end Treasurys have struggled to take down
the bump in debt supply.
"Valuations have started to show some concerns about supply over
and above the influence of higher rates due to the Fed cycle,"
wrote Jim Vogel, interest-rate strategist at FTN Financial.
The Italian budget saga continued to capture the attention of
market participants. Moody's Investors Service downgraded Italy's
debt rating to one notch above 'junk'. Nonetheless, Italian
government paper rallied as investors fixated on the accompanying
"stable" outlook, a sign that a further downgrade would not happen
soon.
The 10-year Italian government bond yield slipped 12.9 basis
points to 3.434%, according to Tradeweb data.
(END) Dow Jones Newswires
October 22, 2018 08:07 ET (12:07 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.