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Treasury rates climb ahead

FOREX_treasury-rates-climb-ahead-of-ecb-policy-update2607_FXPIG

U.S. government bond rates early Thursday advanced as fixed-income investors awaited the latest policy update from the European Central Bank, which could affect Treasurys. Bond investors also awaited a string of economic reports, including on the labor market and international trade.

Late Wednesday, rates on government paper ticked up amid early reports that the European Union and the U.S. were laying the groundwork for easing trade tensions, which had been a source of anxiety global markets.

The 10-year Treasury note yield TMUBMUSD10Y, -0.37% added 2.7 basis points to 2.963%, while the 30-year bond TMUBMUSD30Y, -0.34% rose by 2 basis points at 3.087%.

Meanwhile, the two-year note yield TMUBMUSD02Y, -0.30% was virtually unchanged at 2.655%, retaining a yield perch near its highest since July 2008.

Bond prices fall as yields rise.

Top EU official Jean-Claude Juncker and President Donald Trump, who met at the White House on Wednesday, struck a detente in clashes over trade issues. Trump said talks had yielded an agreement to work toward “zero tariffs” and “zero subsidies on non-auto industrial goods,” and included an EU pledge to import more U.S. soybeans.

The news helped to alleviate some concerns that tit-for-tat trade battles between the U.S. and its global trade partners could morph into a war substantial enough to roil global markets and economies.

Thursday’s session will focus mainly on ECB President Mario Draghi. who will likely be asked about the EU-U.S. trade negotiations and recent comments from Trump, who accused European officials and those in China of manipulating currency and bond markets.

The ECB isn’t expected to make major changes to its monetary policy, however, after saying in June that it planned on winding down asset purchases by the end of this year and suggested that rate increases won’t take place until late in 2019. Market participants will follow the central bank’s comments closely to see if that plan remains intact.

The ECB’s statement is due at 7:45 a.m. Eastern Time, followed by Draghi’s news conference at 8:30 a.m.

A slate of U.S. data is also due for release.

  • A report on weekly jobless claims, with 219,000 claims expected
  • An update on durable goods orders for June, with growth of 3.7% estimated
  • A report on advance trade in goods is also due for June, with a deficit of $67.3 billion expected

Meanwhile, bond investors also will look to a $30 billion auction in seven-year notes slated for 1 p.m., a day after an auction of 5-year paper worth $36 billion. Analysts pointed to solid appetite shown in the Wednesday auction as a sign that long-term investors were waiting to buy Treasurys at higher rates. The ratio of bids accepted to bids received stood at 2.61, the highest level since May’s auction.

Looking ahead, investors will be keenly awaiting an early Friday read on second-quarter gross domestic product, which could have an outsize influence on U.S. government bonds if those figures surprise investors.

Source: marketwatch.com

U.S. government bond rates early Thursday advanced as fixed-income investors awaited the latest policy update from the European Central Bank, which could affect Treasurys. Bond investors also awaited a string of economic reports, including on the labor market and international trade.

Late Wednesday, rates on government paper ticked up amid early reports that the European Union and the U.S. were laying the groundwork for easing trade tensions, which had been a source of anxiety global markets.

The 10-year Treasury note yield TMUBMUSD10Y, -0.37% added 2.7 basis points to 2.963%, while the 30-year bond TMUBMUSD30Y, -0.34% rose by 2 basis points at 3.087%.

Meanwhile, the two-year note yield TMUBMUSD02Y, -0.30% was virtually unchanged at 2.655%, retaining a yield perch near its highest since July 2008.

Bond prices fall as yields rise.

Top EU official Jean-Claude Juncker and President Donald Trump, who met at the White House on Wednesday, struck a detente in clashes over trade issues. Trump said talks had yielded an agreement to work toward “zero tariffs” and “zero subsidies on non-auto industrial goods,” and included an EU pledge to import more U.S. soybeans.

The news helped to alleviate some concerns that tit-for-tat trade battles between the U.S. and its global trade partners could morph into a war substantial enough to roil global markets and economies.

Thursday’s session will focus mainly on ECB President Mario Draghi. who will likely be asked about the EU-U.S. trade negotiations and recent comments from Trump, who accused European officials and those in China of manipulating currency and bond markets.

The ECB isn’t expected to make major changes to its monetary policy, however, after saying in June that it planned on winding down asset purchases by the end of this year and suggested that rate increases won’t take place until late in 2019. Market participants will follow the central bank’s comments closely to see if that plan remains intact.

The ECB’s statement is due at 7:45 a.m. Eastern Time, followed by Draghi’s news conference at 8:30 a.m.

A slate of U.S. data is also due for release.

  • A report on weekly jobless claims, with 219,000 claims expected
  • An update on durable goods orders for June, with growth of 3.7% estimated
  • A report on advance trade in goods is also due for June, with a deficit of $67.3 billion expected

Meanwhile, bond investors also will look to a $30 billion auction in seven-year notes slated for 1 p.m., a day after an auction of 5-year paper worth $36 billion. Analysts pointed to solid appetite shown in the Wednesday auction as a sign that long-term investors were waiting to buy Treasurys at higher rates. The ratio of bids accepted to bids received stood at 2.61, the highest level since May’s auction.

Looking ahead, investors will be keenly awaiting an early Friday read on second-quarter gross domestic product, which could have an outsize influence on U.S. government bonds if those figures surprise investors.

Source: marketwatch.com

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