NEW YORK: US long-dated Treasury debt yields edged higher on Wednesday, boosted by a Reuters report that OPEC has reached a deal to limit oil production, with the agreement to be implemented in November.
US crude futures and Wall Street shares rose on the news, boosting risk sentiment.
According to sources, OPEC agreed to limit oil output to 32.5 million barrels per day.
But despite the recovery, US yields, which move inversely to prices, are still in the midst of a downturn, analysts said, after the Federal Reserve left interest rates unchanged last week and took a cautious stance on the US economy.
Aside from the Fed outlook, problems at major banks and economic data showing slow US growth have bolstered Treasuries' safe-haven appeal.
"You're not going to add risk in this kind of environment," said Jim Vogel, interest rate strategist at FTN Financial in Memphis.
"It may be risk-off or risk-on but you're not going to change your overall risk appetite as long as we have low growth combined with events that tend toward a negative surprise."
Deutsche Bank has been a focus this week as it faces a $14 billion legal battle with the US government in connection with the bank's issuance and underwriting of mortgage-backed securities.
Wells Fargo was also in the spotlight with its sales debacle involving the creation of as many as 2 million accounts without customers' permission.
Recent US economic data have been far from stellar. On Wednesday data showed that while US durable goods orders beat expectations, growth was flat for August. The government also downwardly revised its July estimate to a 0.8 percent gain.
Fed Chair Janet Yellen testified before the House Financial Services Committee and discussed the health of US banks. But in the question-and-answer session, Yellen commented on the US economy, noting that she is not seeing any meaningful upward pressure on inflation, but expects the jobless rate to fall further.
In afternoon trading, US benchmark 10-year Treasury notes were down 1/32 in price for a yield of 1.561, compared with 1.556 percent late on Tuesday.
US 30-year bonds slipped 3/32 in price, yielding 2.282 percent, up from Monday's 2.278 percent.
On the front end of the curve, US two-year notes were flat in price for a yield of 0.750 percent.
The US Treasury's $28 billion seven-year note auction on Wednesday was uninspiring, said some analysts. The yield was at 1.389 percent versus 1.390 percent just before the bid deadline.
Bids totaled $69.3 billion for a 2.47 bid-to-ratio cover, better than 2.38 last month, but below the 2.50 average.
Comments
Comments are closed.