Bond Yields Fall on Weak Retailer Data; 10-Year Auction Solid

Wednesday, 13 Aug 2014 03:46 PM

 

  Comment  |
   Contact  |
  Print  
|  A   A  
  Copy Shortlink

U.S. Treasury debt yields fell on Wednesday as disappointing data on U.S. retail sales revived bets the Federal Reserve might leave interest rates near zero for a longer period in a bid to keep the economic recovery on track.

The decline in bond yields was limited by worries about demand for this week's longer-dated supply. Wednesday's $24 billion in 10-year notes was met with solid demand. The U.S. Treasury will sell $16 billion of 30-year bonds on Thursday.

"The knee-jerk reaction to the retail sales data was disappointment. You see bonds rallying a bit," said Craig Dismuke, chief economic strategist at Vining Sparks in Memphis, Tennessee.

In afternoon U.S. trading, medium-dated Treasury yields fell the most on the day on views the Fed's boosting interest rates might not occur until the latter part of 2015. Five-year yields fell 3.4 basis points to 1.581 percent, while the yield on benchmark 10-year Treasurys was 2.417 percent, down 2.5 basis points.

Bond yields were higher overnight on overseas selling before news that American spending at stores and gasoline stations did not grow in July. Economists polled by Reuters had projected a 0.2 percent gain.

The selling pressure from this week's $67 billion in coupon-bearing government bond supply has been offset by a steady bid for safe-haven Treasurys on worries about conflicts in Iraq, eastern Ukraine and Gaza.

Ten-year yields have not strayed far above last week's 14-month low of 2.349 percent. The latest 10-year note issue due August 2024 was sold at a yield of 2.439 percent, the lowest since June 2013.

"There's a lot of foreign demand for safe-haven (investments) and domestic demand due to geopolitical concerns," said Gene Tannuzzo, portfolio manager with Columbia Management in Minneapolis.

In addition to government supply, investors have bought $14.1 billion in new investment-grade corporate bonds in the past two days, which was the bulk of the $15 billion to $20 billion in supply in that sector expected this week, according to IFR, a unit of Thomson Reuters.

As traders prepared for the rest of this week's bond supply, they have kept an eye on developments abroad and whether conditions might worsen and become a drag on the global economy.

Ukraine denounced Russia's aid convoy heading for its eastern border, a move Kiev and the West see as a pretext for an invasion of the region. Meanwhile, Israelis and Palestinians have not reached a deal to end a month-long war in Gaza as a three-day ceasefire comes to a close.

The Federal Reserve bought $423 million in Treasury Inflation-Protected Securities, the latest transaction in its bond purchase program that is expected to wind down in October.

© 2014 Thomson/Reuters. All rights reserved.

  Comment  |
   Contact  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Kudlow: Lower Oil Prices Are Positive for Economy - Let's Be Optimistic

Friday, 28 Nov 2014 21:13 PM

Lower oil prices are unambiguously positive. Can we please be optimistic about it? . . .

Hans Parisis: Oil, Currency Uncertainties Certain to Spark Volatility

Friday, 28 Nov 2014 16:59 PM

Next year will be challenging year for the markets everywhere and where one big “Black Swan” event, which is a metaphor  . . .

Black Friday Shopping Crowds Thin After Thanksgiving Rush

Friday, 28 Nov 2014 13:11 PM

Mall crowds were relatively thin early on Black Friday in a sign of what has become the new normal in U.S. holiday shopp . . .

Most Commented
Top Stories

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved