BOND REPORT: Treasury Yields Struggle For Direction Ahead Of Busy Week For Central Bankers
17 June 2019 - 9:20PM
Dow Jones News
By Sunny Oh
The Fed will kick off its two-day meeting on Tuesday
U.S. Treasury yields were mixed on Monday ahead of meetings this
week by policy makers for the Federal Reserve, the European Central
Bank and the Bank of Japan, as investors see if central bankers
will push for easier monetary policy as the global economy comes
under pressure.
What are Treasurys doing?
The 10-year Treasury note yield fell 0.7 basis points to 2.086%,
while the two-year note yield rose 1.5 basis points to 1.865%. The
30-year bond yield fell 1.4 basis points to 2.578%. Bond prices
move in the opposite direction of yields.
What's driving Treasurys?
All eyes will fall on the Federal Reserve's two-day meeting
concluding on Wednesday, when it will issue a policy update. The
central bank is expected to signal the possibility of an
interest-rate cut later this year, with some traders on the fed
fund futures market even anticipating a rate decrease this
week.
The ECB is holding its forum on central banking in Sintra,
Portugal, amid questions on whether it will deliver further policy
easing in the next few months after its latest meeting, where ECB
President Mario Draghi indicated plenty of measures remained to
boost the eurozone. But investors carry doubts whether Draghi still
has ammunition to expend after years of implementing ultra-low
interest rates and bond-buying program.
Adding to economic concerns around the U.S., the Empire State
manufacturing survey recorded its biggest monthly drop in history,
falling 26.4 points to a negative 8.6 in June.
See: Trump on Fed's Powell: 'I disagree with him entirely'
(http://www.marketwatch.com/story/trump-on-feds-powell-i-disagree-with-him-entirely-2019-06-16)
Read: The Fed may break a lot of stock-market investors' hearts
this week
(http://www.marketwatch.com/story/the-fed-may-break-a-lot-of-stock-market-investors-hearts-next-week-2019-06-15)
What did market participants say?
"The market is pricing in a 15% chance of a cut on Wednesday,
and while I don't think it happens, I don't think the 95% pricing
of a July cut goes away. The Fed will be as dovish as possible and
I think will definitely signal to the market that if we don't get a
trade deal at the G-20, they will act," wrote David Shiau, senior
U.S. rates trader at Jefferies.
What else is on investors' radar?
Later in the afternoon, the Treasury Department will release its
monthly Treasury International Capital report listing the holdings
of U.S. dollar-denominated bonds among foreign investors.
(END) Dow Jones Newswires
June 17, 2019 16:05 ET (20:05 GMT)
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