BOND REPORT: Treasury Yields Notch Biggest Weekly Gain In A Month As China-U.S. Tensions Ease
16 Febbraio 2019 - 12:15AM
Dow Jones News
By Mark DeCambre, MarketWatch
Treasury yields on Friday mostly rose for the day, pushing
government bonds to the best weekly gains in about a month as
investors looked past bonds to riskier assets while digesting
apparent progress in Sino-U.S. tariff negotiations.
What did yields do?
The 10-year Treasury yield added 0.7 basis point to reach
2.666%, but booked a weekly gain of 3.4 basis points, according to
Dow Jones Market Data. The two-year Treasury note yield rose 2.5
basis point to 2.520%, adding to a weekly advance of 5.7 basis
points. However, the 30-year Treasury bond yield fell 1.3 basis
points to 2.996%, but recorded a weekly climb of 2.1 basis
points.
All three government bond yield registered their largest weekly
climb since Jan. 18.
Yields move in the opposite direction of bond prices.
What drove market moves?
In a statement issued Friday morning, the White House described
weeklong talks between Beijing and Washington, which ended on
Friday
(http://www.marketwatch.com/story/us-china-trade-round-wraps-up-with-progress-toward-expected-memorandum-of-understanding-2019-02-15),
as "detailed and intensive," which led to "progress between the two
parties."
"Both sides will continue working on all outstanding issues in
advance of the March 1, 2019, deadline for an increase in the 10
percent tariff [to 25%] on certain imported Chinese goods," the
statement read, while Chinese news agency Xinhua said 'important
progress' had been made
(http://www.marketwatch.com/story/us-and-china-made-important-progress-in-trade-talks-xinhua-2019-02-15).
Meanwhile, President Donald Trump signed a budget deal to avoid
another U.S. partial closure, but declared a state of emergency at
the country's southern border
(http://www.marketwatch.com/story/trump-today-president-predicts-lawsuits-as-he-says-hell-declare-emergency-over-border-and-reports-progress-on-china-trade-talks-2019-02-15),
potentially setting the stage for a fresh legal clash with
Democrats who will oppose the action.
On Thursday, markets fixed-income markets moved sharply after a
U.S. retail sales report for December showed the biggest one-month
decline in about nine years, stoking fears of a recession and
driving investors into haven bonds.
Federal Reserve Board Gov. Lael Braiard on the day those weak
retail results were released said the data were a reminder of
downside risks
(http://www.marketwatch.com/story/feds-brainard-says-retail-sales-report-is-a-reminder-of-downside-risks-facing-economy-2019-02-14)
to the economy and that she was comfortable maintaining the Fed's
newfound wait-and-see stance on monetary policy. She also said the
central bank, led by Chairman Jerome Powell, would end the unwind
of its asset portfolio "later this year," which appeared to take
some of the air out of bond buying and support risk assets like
stocks.
Read:Why the Fed may shift to buying Treasurys next year
(http://www.marketwatch.com/story/why-the-fed-may-shift-to-buying-treasurys-next-year-2019-02-14)
What did analysts say?
"While global crosscurrents were the initial reason to trigger a
'Powell put', the combination of weak activity data and subdued
inflation figures this week strengthened the case for a prolonged
Fed pause. We estimate that if the Fed stays 'put' in 2019, as
markets expect, this would provide a 0.3 [percentage point] growth
buffer to real GDP in 2020," wrote Lydia Boussour, senior
economist, and Gregory Daco, chief U.S. economist at Oxford
Economics, in a Friday research note.
"Put" refers to options that can be used to hedge against market
coming losses.
What data were in focus?
The cost of imported goods fell in January for the third
straight month, down 0.5% from December, led by lower oil
prices.
The Empire State manufacturing index, which gauges the health of
the New York state manufacturing sector rose 4.9 points in February
to 8.8, above economists expectations of 7.6, according to a survey
by Econoday.
U.S. industrial production fell in January for the first time in
eight months
(http://www.marketwatch.com/story/us-industrial-production-slumps-in-january-2019-02-15),
the Federal Reserve said.
The preliminary University of Michigan consumer sentiment index
for February rebounded, with the index rising to 95.5 from 91.2 in
January, which was the worst since November 2016. Economists polled
by MarketWatch expected a 94 reading.
U.S. business inventories fell 0.1%
(http://www.marketwatch.com/story/business-inventories-in-the-us-decline-01-in-november-2019-02-14)
in November, according to a report delayed by the partial
government shutdown. Sales dropped 0.3% in the month. The ratio of
inventories to sales was flat at 1.35, the Commerce Department
said.
(END) Dow Jones Newswires
February 15, 2019 18:00 ET (23:00 GMT)
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