BOND REPORT: Treasury Yields Inch Higher As Investors Brace For Earnings, Bond Sales
October 06 2015 - 10:37AM
Dow Jones News
By Ellie Ismailidou, MarketWatch
When large volumes of new bonds are sold to the market, prices
of existing bonds fall
Treasury yields climbed on Tuesday as investors braced for the
beginning of quarterly earnings along with a flurry of new Treasury
and corporate bond sales.
While stocks were mixed
(http://www.marketwatch.com/story/us-stock-futures-slip-after-rally-as-earnings-season-looms-2015-10-06),
Treasury yields moved slightly higher for a second session, after
posting the largest single-day gain in about two weeks
(http://www.marketwatch.com/story/treasurys-under-selling-pressure-as-global-stocks-rally-2015-10-05)
Monday.
(http://www.marketwatch.com/story/treasurys-under-selling-pressure-as-global-stocks-rally-2015-10-05)A
flurry of new Treasury and corporate-bond offerings is on
investors' minds. The spate of issuance comes after $21 billion in
three-month Treasurys were sold Monday at a yield of zero, the
lowest yield at a three-month auction ever recorded.
(http://www.marketwatch.com/story/3-month-treasury-bills-sold-at-record-low-0-yield-2015-10-05)
The Treasury department will sell $24 billion three-year notes
on Tuesday, $21 billion in 10-year notes on Wednesday, and $13
billion 30-year bonds on Thursday.
When large volumes of new bonds are sold to the market, prices
of existing bonds tend to fall and yields tend to rise.
The impending new bond sales are "the excuse for some of the
pressure on 10-year and 30-year [Treasurys]," said David Ader, head
of government bond strategy at CRT Capital Group, in a Tuesday
note.
Early in the trading session, the Commerce Department said U.S.
exports dropped to their lowest level in three years
(http://www.marketwatch.com/story/us-trade-deficit-leaps-16-in-august-to-483-billion-2015-10-06)
leading the trade deficit to jump more than what economists had
anticipated.
The yield on the benchmark 10-year Treasury note gained 1.4
basis points to 2.069%, according to Tradeweb. One basis point is
equal to one hundredth of a percentage point.
Treasury yields fall when prices rise and vice versa.
Meanwhile, the 30-year bond yield rose 1.8 basis point to 2.916%
while the yield on the two-year Treasury note gained 0.2 basis
points to 0.701%.
Abroad, European government bonds were under selling pressure
Tuesday after German manufacturing orders unexpectedly slumped in
August
(http://www.marketwatch.com/story/german-manufacturing-orders-slump-unexpectedly-2015-10-06).
Investors braced for a speech by European Central Bank President
Mario Draghi scheduled for Tuesday evening local time.
"Speculation is rising that the ECB will be forced by lowflation
to expand their [quantitative easing] program, and although it's
unlikely Draghi will address that prospect directly, any hints in
his remarks will have more bearing for the stimulus outlook today
than they did several months ago," said Guy LeBas, chief
fixed-income strategist at Janney, in a Tuesday note.
The yield on the benchmark 10-year German bond known as the
bund, gained 3.7 basis points to 0.604%, after falling Friday to
its lowest level since early June.
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(END) Dow Jones Newswires
October 06, 2015 10:22 ET (14:22 GMT)
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