US bond yields fall before 10-year note auction

  NEW YORK: US Treasury yields fell on Tuesday for a second straight day as anxiety about possible US military s
11 Apr, 2017

 

The decline in bond yields was limited by selling among investors and dealers to make room for $20 billon worth of 10-year Treasury notes, which is part of this week's $56 billion worth of coupon-bearing government bond supply.

"Any escalation in geopolitical concerns could push us back lower in yields," said Justin Lederer, Treasury strategist at Cantor Fitzgerald in New York.

North Korean state media warned on Tuesday of a nuclear attack on the United States in retaliation to any signs of US aggression amid worries about North Korea's advancing weapons program.

The White House signaled it was open to additional strikes on Syria if its government uses chemical weapons again or deploys barrel bombs. US President Donald Trump ordered a missile strike on a Syrian air base last week in response to an alleged Syrian military attack using poison gas that killed scores of civilians.

Furthermore, a new poll suggesting a tightening presidential race in France stoked worries about an anti-EU candidate, either National Front's Marine Le Pen or far-left wildcard Jean-Luc Melenchon, winning it all in next month's run-off.

Benchmark 10-year Treasury yields were down 5 basis points at 2.312 percent in late morning trading on Tuesday. Last Friday they fell to 2.269 percent, the lowest intraday level since Nov. 18, following a government report showing a steep drop in domestic hiring in March.

Trading volume has been muted due to the Passover and upcoming Easter holidays. US financial markets will close on the Good Friday holiday.

Traders expected the upcoming 10-year auction at 1 p.m. (1700 GMT) to sell at a yield of 2.326 percent, lower than the 2.560 percent set at the prior auction which was the highest yield since July 2014.

Separately, investors have been monitoring for further clues on the Federal Reserve's possible plan to begin paring reinvestments into Treasuries and mortgage-backed securities later this year, which is seen as a major step for the Fed to unwind an extraordinary policy it adopted to combat the last recession.

At 1:45 p.m. (1745 GMT), Minneapolis Fed President Neel Kashkari will participate in a question-and-answer session at an event held by a Minnesota business group.

 

Copyright Reuters, 2017
 

 

 

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