Treasury Yields Decline Following Weak Economic Data -- Update
25 June 2019 - 10:19PM
Dow Jones News
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)
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