Treasury Yields Decline Following Weak Economic Data -- Update

Date : 25/06/2019 @ 21:19
Source : Dow Jones News

Treasury Yields Decline Following Weak Economic Data -- Update

By Ira Iosebashvili 

The yield on the 10-year Treasury note fell to its lowest level in more than 2 1/2 years Tuesday after weak U.S. economic data bolstered the case for the Federal Reserve to cut interest rates in coming months.

The benchmark 10-year yield, which helps set borrowing costs on everything from mortgages to corporate loans, settled at 1.994%, the lowest level since November 2016, from 2.021% on Monday.

Yields, which fall as bond prices rise, slipped after Tuesday morning data releases showed U.S. consumer sentiment in June had declined to its lowest in nearly two years, while purchases of newly built single-family homes decreased in May.

The 10-year yield fell as low as 1.982% and was on track for its lowest close in more than 2 1/2 years.

Yields temporarily pared those declines later in the session after James Bullard, president of the Federal Reserve Bank of St. Louis, told Bloomberg TV he doesn't yet think the economic situation warrants a 50 basis-point rate cut.

Later in the session, Fed Chairman Jerome Powell said officials are debating whether uncertainty about trade policy will cause the economy to slow and require rate cuts later in 2019.

Bond yields around the world have fallen in recent days after central banks, including the Fed, signaled they were preparing to ease monetary policy.

Several investors said they would be closely watching the Group of 20 meeting in Japan at the end of the week. Signs that China and the U.S. are closer to reaching a deal on trade would likely weigh on bond prices and send riskier assets higher, some market participants believe.

"Our sense of things at the moment is that if the G-20 meeting at the end of the week...produces even a very modest amount of good news about trade, risk assets will move sharply higher," said Steven Barrow, head of G-10 strategy at Standard Bank, in a note to investors.

Tuesday's weak data also weighed on the dollar, driving the U.S. currency to its weakest level against the Japanese yen since January earlier in the session. The New Zealand dollar was up 0.4% in later afternoon New York trading.

In emerging markets, the dollar was up 0.2% against the Turkish lira and gained 0.5% against the Russian ruble.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.1% at 89.57.

Write to Ira Iosebashvili at ira.iosebashvili@wsj.com

 

(END) Dow Jones Newswires

June 25, 2019 17:04 ET (21:04 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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