US yields dip as bonds seen safer than retreating stocks
The reopening of the government week has fanned risk-off sentiment
[NEW YORK] US Treasury buying pushed yields lower on Friday (Nov 14) as a sell-off on Wall Street saw investors seek less-risky assets while they marked time for the reopened government to resume publishing economic indicators.
The yield on the benchmark US 10-year Treasury note was down 2.1 basis points at 4.09 per cent.
“It does seem like when the move in stocks started to pick up some speed, that’s when rates actually moved a little bit lower as well,” said Gennadiy Goldberg, head of US rates strategy at TD Securities in New York. “It’s a safe haven bid today as equities are lower.”
Rather than restore some market confidence, the reopening of the government this week has fanned risk-off sentiment, with investors worried that gaps in economic data, once they start being released again, will delay or derail Federal Reserve interest rate cuts.
There is doubt about the publication of October’s inflation data and the employment report will not include the jobless rate, White House economic adviser Kevin Hassett said, because the household survey from which it is calculated was not conducted.
Several Fed speakers in recent days have expressed reservations about easing next month, based on worries about inflation and what looks like a more stable labour market. Longer-dated yields were depressed in part by a weak 30-year bond auction on Thursday.
Futures traders place the odds of a quarter point December ease at just over 50 per cent, which shows a notable drop in confidence compared to a week ago and especially versus the near certainty placed on it before the Fed cut two weeks ago.
The two-year US Treasury yield, which typically moves in step with interest rate expectations for the Fed, fell 2.1 basis points to 3.568 per cent.
A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a positive 52 basis points.
The yield on the 30-year bond fell 1.3 basis points to 4.689 per cent. REUTERS
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