By Cynthia Lin
U.S. Treasury prices rose Wednesday as choppy global growth
signals kept investors seeking out safer assets.
In early New York trading, benchmark 10-year notes increased
6/32 in price to yield 2.337%, according to Tradeweb. The 30-year
bond gained 15/32 to yield 3.064%. Bond yields decline when prices
rise.
Those gains came after a day off for the U.S. bond markets in
observance of Veterans Day, and keep the market in a tight range
established since the start of the month. Bond investors have had
to balance between decent U.S. economic signals and uncertainties
abroad, leaving the 10-year yield in a 2.27% to 2.40% range.
Overnight, the Bank of England reduced its growth and inflation
outlook for the U.K., while Germany reported a downturn in
wholesale prices for October. Meanwhile, the U.S. has shown
continued progress in its labor-market recovery, with last Friday's
employment report showing further job creation and a decline in the
unemployment rate.
The balancing act required of bond investors was reflected in
J.P. Morgan's latest weekly Treasury client survey. As of Nov. 10,
the survey showed 24% of all its client accounts betting on lower
Treasury prices, while 15% positioned for higher prices, for a net
short of 9. Among just its active, more-speculative clients,
however, positions swung into a net long of 8, the most since
February.
Despite the historically low yields on U.S. Treasurys, bond
traders say the array of global uncertainties are keeping the
safe-haven bonds in demand. Their yields are also relatively
attractive compared with other haven assets, such as the 10-year
German bund, which last yielded 0.80%.
That is why some traders expect Wednesday afternoon's 10-year
note auction to attract a decent crowd. The U.S. Treasury is
scheduled to sell $24 billion in 10-year notes, with results due
just after 1 p.m. EST.
Bond traders say the key to pushing U.S. rates higher is
stronger signs of inflation. While many bond strategists have
lowered their year-end 10-year yield forecasts to around 2.75%,
that still suggests persistent selling from current levels over the
remaining seven weeks in 2014.
Write to Cynthia Lin at cynthia.lin@wsj.com