BOND REPORT: Treasury Yields Hit More-than-4-week High
21 October 2019 - 08:47PM
Dow Jones News
By Sunny Oh
Auctions for $113 billion of Treasury debt will be held this
week
U.S. Treasury yields pushed higher Monday as U.K. Prime Minister
Boris Johnson was prevented from holding a vote on his agreement
dictating the country's exit from the European Union, presenting
another complication to the deal's passage.
What are Treasurys doing?
The 10-year Treasury note yield rose 4.7 basis points to a
four-week high of 1.794%, while the 2-year note rate was up 4.1
basis points to 1.615%. The 30-year bond yield picked up 4.3 basis
points to 2.286%, its highest since Sept. 16.
In the past few weeks, the benchmark maturity's rate has
remained in a tight range between 1.5% and 1.9% since the beginning
of September, as positive developments on geopolitical uncertainty
has been balanced against the growing gloom around the U.S.'s
economic health.
Prices for U.S. government debt fall as yields rise.
What's driving Treasurys?
Bond markets recently have been moving in step with uncertainty
surrounding Britain's plans to exit from the European Union, with
Johnson renewing his efforts to get his Brexit deal ratified after
a Saturday setback. But House of Commons Speaker John Bercow
blocked the prime minister from holding a vote on his proposal on
Monday.
Read:What the latest Brexit setback means for markets in a
crunch week for the U.K
(http://www.marketwatch.com/story/what-the-latest-brexit-setback-means-for-markets-in-a-crunch-week-for-the-uk-2019-10-21).
On the weekend, Johnson's bill was postponed by lawmakers, and
then stymied by an amendment ensuring that any kind of agreement to
leave the EU would have to pass through the House of Commons, the
lower chamber of British Parliament. Johnson later asked EU
officials for a three-month extension, but analysts say he will be
looking to push for a deal before Oct. 31.
The 10-year U.K. government bond yield rose 4.4 basis points to
0.753%, Tradeweb data show.
Investor appetite for assets viewed as risky were buoyed by
President Donald Trump's comments on the prospect of a U.S.-China
trade deal, which he said was coming along great on Monday
(https://t.co/cWKkw7O8SI?amp=1). The S&P 500 and the Dow were
on course to finish higher.
Mario Draghi will preside over his last meeting as the president
of the European Central Bank this week. This comes as signs of
friction
(http://www.marketwatch.com/story/draghi-will-leave-lagarde-a-warring-ecb-2019-10-10)
within its monetary policy-making committee have surfaced over the
risks around additional easing in an ultralow interest rate
environment.
Also in focus, auctions for $113 billion of Treasury debt will
be held this week. U.S. government debt auctions can influence the
price of outstanding bonds as broker-dealers make room for the
influx of fresh debt issuance.
What did market participants say?
The struggle to push a Brexit agreement through Parliament
"doesn't change much for investors. This is all about tactics,"
said Chris Iggo, chief investment officer of core investments at
AXA Investment Managers, in an interview with MarketWatch.
(END) Dow Jones Newswires
October 21, 2019 15:32 ET (19:32 GMT)
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