Treasury Yields Fall on Tensions in Persian Gulf
13 June 2019 - 6:38PM
Dow Jones News
By Ira Iosebashvili
U.S. government-bond prices rose Thursday, as fears of a
military standoff in the Persian Gulf sent investors into assets
perceived as safe.
The yield on the benchmark 10-year Treasury recently traded at
2.102%, according to Tradeweb, compared with 2.129% Wednesday.
Yields fall as bond prices rise.
The yield declines came after two oil tankers were damaged in
attacks off the coast of Iran early Thursday, stoking concerns over
trade disruptions in the Strait of Hormuz and raising demand for
Treasurys and other so-called haven assets.
Signs of muted inflation, together with worries over slowing
global growth, have buoyed Treasurys in recent months, driving the
10-year yield down from multiyear highs reached late last year.
Muted inflation helps preserve the purchasing power of bonds' fixed
payments.
Some analysts said low inflation is giving the Federal Reserve
room to lower interest rates, which could lift prices for
outstanding bonds and send yields lower still. More than three
quarters of economists surveyed by The Wall Street Journal think
the central bank's next move will be to cut interest rates, likely
before the fall.
"The price action in U.S. rates markets confirms in our minds
that the bond bull move remains alive and well," analysts at
Citigroup said in a note to clients.
Investors will get a new look in the Fed's thinking next week
when the central bank concludes its monetary-policy meeting
Wednesday.
The sharp move higher in oil prices also boosted the currencies
of some crude exporters. The dollar was recently down 0.1% against
the Canadian dollar, while also losing ground against the Brazilian
real and Russian ruble.
At the same time, elevated tensions in the Gulf boosted the
Swiss franc and Japanese yen, two popular destinations for nervous
investors. A cloudy outlook for global growth weighed on
emerging-market currencies, taking the dollar higher against the
Turkish lira, South African rand and Chilean peso.
The WSJ Dollar Index, which measures the U.S. currency against a
basket of 16 others, was recently up 0.1% to 90.41.
Write to Ira Iosebashvili at ira.iosebashvili@wsj.com
(END) Dow Jones Newswires
June 13, 2019 13:23 ET (17:23 GMT)
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