Skip to main content

Bonds I Bond Yields Report on Tuesday 18, June 2019 I Bond yields bounce off multiyear lows after Trump tweets he'll meet with China's Xi

Thomas Franck

The yield on the benchmark 10-year Treasury note fell to its lowest level since September 2017 on Tuesday as the Federal Reserve began its two-day policy meeting and European Central Bank President Mario Draghi promised further stimulus if inflation doesn’t meet its target in the euro zone.
Yields moved off their lows later Tuesday morning after President Donald Trump tweeted that he will be meeting with China’s Xi Jinping at the G-20 summit next week.
By 3:10 p.m. ET, the yield on the benchmark 10-year Treasury note had fallen to 2.06%, off a 20-month low of 2.016% hit earlier in the session. The yield on the 2-year Treasury note rose to 1.866% while the rate on the 3-month bill hovered at 2.22%.
While the Fed is expected to leave the key interest rates unchanged in its June meeting, many expect the Chair Jerome Powell to telegraph easier monetary policy ahead during Wednesday’s press conference. His comments at 2:30 p.m. ET will follow the release of the central bank’s decision at 2 p.m.
Softer economic gauges like May’s anemic jobs report and a lackluster consumer pricing print convinced many economists and fixed-income traders earlier this month that the central bank will hint at its ability to lower borrowing costs if needed.
“I think they should cut rates, and I think the discussion should instead be whether to cut 25 basis points or 50 basis points,” said Jim Bianco, head of the Chicago-based advisory firm Bianco Research. “But they’ll probably do what they usually do, which is wait until it’s too late.”

“The market has been very vocal of its pricing of expected inflation,” he added. “The only thing transitory is Powell’s use of the word ‘transitory,’” he said, referring to the Fed chair’s characterization of sluggish inflation as a temporary blip.
“We say in our statement of longer-run goals and monetary policy strategy that the Committee would be concerned if inflation were running persistently above or below 2%,” Powell said last month.
“And in this case, as we look at these readings in the first quarter for core, we do see good reasons to think that some were or all of the unexpected decrease may wind up being transient,” he added.
Traders are now pricing in a more than 80% chance of a rate cut in July and 70% probability of another reduction in September, according to the CME Group’s FedWatch tool.
Meanwhile, ECB President Draghi said Tuesday that the central bank may need to ease monetary policy again over the coming months, possibly through new rate cuts or asset purchases, if inflation doesn’t bounce back toward its target.
“In the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required,” Draghi said.
The central bank foresees “lingering softness” on the horizon, exacerbated by geopolitical factors and trade disputes that have dampened exports and softened manufacturing.

U.S. Markets Overview: Treasurys chart

“With 10yr Bund yields already at extraordinarily low levels and the Eurozone economy awash in enormous levels of monetary accommodation, and with Draghi is set to step down in just a matter of months, it’s difficult to see why investors should be piling into equities,” wrote J.P. Morgan director Adam Crisafulli.
The dovish tone prompted a sharp drop in the euro as well as European fixed-income rates, with the 10-year German bund skidding to -0.3% for the first time ever. The yield on the French 10-year note briefly traded in negative territory for the first time ever and was last seen at zero.
Yields bounced off their lows later Tuesday morning after Trump tweeted that he had a “very good telephone conversation” with China’s Xi.
The president added that he will meet with Xi during next week’s G-20 meeting in Japan, where the two leaders are expected to address the ongoing trade spat between the two economic powerhouses.
— CNBC’s Sam Meredith contributed reporting.

Source: CNBC


Popular posts from this blog

Analysis | The Cybersecurity 202: How the shutdown could make it harder for the government to retain cybersecurity talent

By Joseph Marks 13-17 minutes THE KEY President Trump delivers an address about border security amid a partial government shutdown on Jan. 8. (Carolyn Kaster/AP) The partial government shutdown that's now in its 18th day is putting key cyber policy priorities on hold and leaving vital operations to a bare bones staff. But the far greater long-term danger may be the blow to government cyber defenders' morale, former officials warn. With the prospect of better pay and greater job security in the private sector, more government cyber operators are likely to decamp to industry, those former officials tell me, and the smartest cybersecurity graduates will look to industry rather than government to hone their skills. That’s especially dangerous, they say, considering the government’s struggle to recruit and retain skilled workers amid a nationwide shortage of cybersecurity talent. About 20 percent of staffers are furloughed at the De

Democrats call for investigation into Trump’s iPhone use after a report that China is listening:Analysis | The Daily 202 I The Washington Post. By James Hohmann _________________________________________________________________________________ President Trump and Chinese President Xi Jinping visit the Great Hall of the People in Beijing last November. (Andrew Harnik/AP) With Breanne Deppisch and Joanie Greve THE BIG IDEA: If Democrats win the House in two weeks, it’s a safe bet that one of the oversight hearings they schedule for early next year would focus on President Trump’s use of unsecured cellphones. The matter would not likely be pursued with anywhere near the gusto that congressional Republicans investigated Hillary Clinton’s use of a private email server during her time as secretary of state. Leaders of the minority party have higher priorities . But Democratic lawmakers made clear Thursday morning that they will not ignore a New York Times report that Trump has refused to stop using iPhones in the White House, despite repeated warnings from U.S. intelligence offici

RTTNews: Morning Market Briefing.-Weekly Jobless Claims Edge Down To 444,000. May 13th 2010

Morning Market Briefing Thu May 13 09:01 2010   Commentary May 13, 2010 Stocks Poised For Lackluster Open Amid Mixed Market Sentiment - U.S. Commentary Stocks are on pace for a mixed start to Thursday's session, as a mostly upbeat jobs report continued to relieve the markets while some consternation regarding the European debt crisis remained on traders' minds. The major index futures are little changed, with the Dow futures down by 4 points. Full Article Economic News May 13, 2010 Weekly Jobless Claims Edge Down To 444,000 First-time claims for unemployment benefits showed another modest decrease in the week ended May 8th, according to a report released by the Labor Department on Thursday, although the number of claims exceeded estimates due to an upward revision to the previous week's data. Full Article May 13, 2010 Malaysia's Decade High Growth Triggers Policy Tightening Malaysia's economy grew at the fastest pace in a decade in