Government Bonds Fall Ahead of Treasury Auction
09 October 2019 - 6:13PM
Dow Jones News
By Daniel Kruger
U.S. government bond prices fell Wednesday ahead of the second
of three auctions of Treasury debt this week.
The yield on the benchmark 10-year Treasury note rose to a
recent 1.573%, according to Tradeweb, compared with 1.532%
Tuesday.
Yields, which rise when bond prices decline, climbed after
investors pared bets on Treasury debt after the securities gained
Tuesday for the eighth time in the past nine sessions. The
government is selling $24 billion 19-year notes Wednesday.
The majority of the demand at the auction could come from U.S.
mutual funds after they purchased more than 60% of the August
offering of those securities, the largest share of a 10-year note
auction on record, said Benjamin Jeffrey, an interest-rates
strategist at BMO Capital Markets.
U.S. mutual-fund investors are on track to buy the biggest share
of Treasury auctions this year, according to government data, at
the same time yields on U.S. government debt have declined to
multiyear lows.
Investors have sought safe assets amid signs that economic
growth around the world and the in the U.S. has slowed, hindered by
trade conflicts between the U.S. and China. While the unemployment
rate fell last month to its lowest rate in almost 50 years, the
pace of job gains has slowed this year. There are also signs that
activity in both the manufacturing and services sectors is
decelerating. Some investors have said they expect Treasury yields
to fall to record lows should economic output continue to slow.
The Federal Reserve has cut interest rates twice this year to
help sustain the pace of growth against the risk that a reduction
in global trade will lead to slower growth in the U.S. Investors
widely expect that the Fed will cut rates for a third time at its
meeting later this month.
"The factors that have driven yields to these levels haven't
gone away, but rather have only intensified," Mr. Jeffrey said.
The WSJ Dollar Index rose less than 0.1% to a recent 91.91 after
rising versus the Japanese yen and the British pound, while
slipping against the euro.
Write to Daniel Kruger at Daniel.Kruger@wsj.com
(END) Dow Jones Newswires
October 09, 2019 12:58 ET (16:58 GMT)
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