BOND REPORT: 10-year Treasury Yield Pushes Above 1.6% After European Bond-market Selloff Spills Into U.S.
By Sunny Oh
U.S. consumer prices flat in September
U.S. Treasury yields climbed on Thursday, after minutes from the
European Central Bank's September meeting highlighted rifts within
its policy-making committee, casting doubt on further easing and
sparking a selloff in European government paper.
What are Treasurys doing?
The 10-year Treasury note yield rose 4.4 basis points to 1.626%,
while the 30-year bond yield was up 4.2 basis points to 2.129%. The
2-year note rate was 2.4 basis points higher at 1.488%.
The 10-year German government bond yield climbed 7.2 basis
points to negative 0.485%, around a three-week high.
What's driving Treasurys?
Minutes of the ECB Governing Council's last meeting in September
showed that policy makers agreed on the need for further easing,
but the decision to resume monthly asset purchases -- the
centerpiece of its quantitative easing program -- proved highly
Read:Draghi will leave Lagarde a warring ECB
Investors also monitored developments on U.S.-China trade after
President Donald Trump said Thursday he plans to meet Friday with
Chinese Vice Premier Liu He
His announcement boosted appetite for risky assets, such as stocks,
at the expense of U.S. government paper.
The S&P 500 and the Dow Jones Industrial Average extended
Conflicting reports over the likelihood of a deal whipsawed the
bond market in Asian and European trading hours. Some reports
suggested lower-level talks earlier this week had made no headway
on critical issues, and that the Chinese delegation's visit was cut
short. Yet Bloomberg News reported that the White House could put
in place a currency pact and suspend tariff increases that are set
to take effect next week.
See: U.S.-China talks could lead to currency deal or collapse
quickly, conflicting reports say
This comes as Liu meets with Trade Representative Robert
Lighthizer and Treasury Secretary Steven Mnuchin on Thursday in
The U.S. consumer-price index for September
was unchanged. Economists polled by MarketWatch expect consumer
prices to rise 0.1%. In other data, weekly jobless claims fell in
early October. Earlier this week, a data release showed producer
prices fell 0.3% in September, one of the earlier indications that
price pressures may be waning.
What did market participants' say?
"The inflation numbers are humdrum, it doesn't materially change
the outlook for the Fed and there's nothing really there to change
our view of the easing bias that the Fed has had," said Steve
Johnson, senior portfolio manager at SVB Asset Management, in an
interview with MarketWatch.
"Christine Lagarde's first task as new ECB president will be to
urgently fix the rift. As long as it remains, we do not expect any
imminent additional easing measures from the bank, even if the
economic outlook gets worse," wrote Carsten Brzeski, chief
economist for ING Germany.
(END) Dow Jones Newswires
October 10, 2019 10:20 ET (14:20 GMT)
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