Treasury Yields Hit Lowest Since Late 2017

Treasury Yields Hit Lowest Since Late 2017

Troy Powers
April 1, 2019

Yields across the curve have tumbled, including the benchmark 10-year U.S. Treasury rate, which hit a 15-month low of 2.38% on Monday.

The pan-European STOXX 600 index lost 0.45 percent, its fourth straight drop.

The yield on 10-year Treasuries was 2.36 percent at 10:47 NY, down six basis points from its close Tuesday.

Mitchell recommended clients continue to "buy the dips" in Treasury prices, and noted downside yield support comes in at 2.34 percent, 2.32 percent and 2.30 percent.

That said, Yellen conceded that the USA economy is indeed slowing down, and that if the inversion of the yield curve meant anything, it would be a signal for the Fed to cut interest rates, rather than to continue hiking them.

"The US yield curve continues to invert", said Michael Every, Hong Kong-based senior Asia-Pacific strategist at Rabobank.

The Treasury Department saw strong demand for a $40 billion sale of two-year notes on Tuesday despite lower yields, the first sale of $113 billion in coupon-bearing supply this week.

It has fallen more than 20 basis points since the Fed last week ditched projections for raising rates this year and announced the end of its balance sheet reduction, citing signs of an economic slowdown.

"This is not a healthy sign, as bond-market watchers should know and equity-market obsessives should rapidly learn", he said in a note.

San Francisco Fed researchers have said that the difference in those two maturities was the most useful for forecasting a recession.

"I'd be careful not to over-read or overreact in any moment to what markets are saying...because they have the ability to change on a dime", Kaplan said.

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"I expect some correction to the latest rally in bonds". As Tom Stevenson says in The Daily Telegraph, the United Kingdom is now "cheaper, whatever your preferred measure might be", than Europe, the US, Japan and emerging markets.

The government will also sell $41 billion in five-year notes on Wednesday and $32 billion in seven-year notes on Thursday.

A surprise move by New Zealand's central bank to signal that its next shift would likely be a cut also stoked gains in global bonds.

The euro zone bank stocks index was up 2.4 percent after Reuters reported the ECB was studying options to lower the charge banks pay on some of their excess cash as a possible way to offset the side-effects of its ultra-easy policy.

In the currency market, the fall in US yields undermined the dollar's yield attraction.

And it is flirting with lows last seen in late 2017.

"In addition, watch for a series of "indicative" votes by the UK Parliament today on next steps for Brexit".

Oil prices hovered below their recent four-month peaks, as the prospect of tighter USA crude supply was offset by concerns about a slowdown in global economic growth.

U.S. crude futures traded at US$59.26 per barrel, up three-quarters of a per cent on the day, a tad below Thursday's high of US$60.39, its highest since mid-November.

Brent futures were up 0.3 percent at $67.42 a barrel.

Gold retreated from the more than 3-week highs touched in the previous session.