BOND REPORT: U.S. 10-year Yield Tops 2.6% For First Time Since March
January 18 2018 - 06:54AM
Dow Jones News
By Sara Sjolin, MarketWatch
Market is keeping tabs on Washington, where the possibility of a
partial government shutdown looms
The yield on 10-year U.S. government paper on Thursday jumped
above 2.6% for the first time since March after the Federal
Reserve's Beige Book, out the previous afternoon, pointed to a
tighter labor market.
What are yields doing?
The yield on the benchmark 10-year U.S. Treasury note rose 1.5
basis point to 2.6047%, trading around its highest level since
mid-March, according to FactSet data. The yield reached an intraday
high of 2.6158%.
The yield on the 2-year note slipped 0.8 basis point to 2.0439%,
while the rate on the 30-year bond climbed 1.9 basis point to
2.8759%.
Yields and prices move in opposite directions.
What's driving the market?
Thursday's move was a continuation of the mood late in
Wednesday's session
(http://www.marketwatch.com/story/treasury-yields-tick-higher-ahead-of-data-2018-01-17)
after the Fed's so-called Beige Book, a roundup of economic
anecdotes gathered by regional Fed banks, painted a portrait of a
mostly robust U.S. economy.
The report also noted that most districts are starting to see
"ongoing labor market tightness," a factor that could lead to a
rise in wages and inflation. Higher inflation could accelerate the
Fed's rate hikes in 2018, which in theory would be supportive for
U.S. yields.
Additionally, analysts said speculation that U.S. companies will
repatriate earnings kept abroad was pushing yields higher. That
means companies would have to liquidate their investments by
selling Treasurys, which in turn would send yields higher.
Traders also kept an eye on Washington, where the possibility of
a partial government shutdown kept lawmakers busy. The current
stopgap funding bill that was passed on Dec. 21 expires on Saturday
and the White House and Congress have yet to reach a deal on
extending it. Lawmakers have been trying to hammer out an agreement
on immigration, which is seen as crucial to breaking the deadlock
and keeping the government open.
What are analysts saying?
Yields are "pushing higher as markets started to price in a
faster face of prospective rate rises, with both Charles Evans of
the Chicago Fed and Robert Kaplan of the Dallas Fed painting a
positive outlook for the U.S. economy, with the prospect of three
rate rises this year as a base-case scenario," said Michael Hewson,
chief market analyst at CMC Markets UK, in a note.
What else is on investors' radar?
Economic data reports scheduled for release Thursday include
updates on weekly jobless claims, housing starts and building
permits, all due at 8:30 a.m. Eastern. The Philly Fed manufacturing
index for January is expected at 10 a.m. Eastern.
(END) Dow Jones Newswires
January 18, 2018 06:39 ET (11:39 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Feb 2024 to Mar 2024
FTSE 100
Index Chart
From Mar 2023 to Mar 2024