NEW YORK (MarketWatch) — Treasury prices extended gains on Friday, pushing 10-year note yields under 2.90%, after data showed the U.S. economy grew at a slower pace in the second quarter than analysts had expected.
Yields on the 10-year securities 10_YEAR -2.17% , which move inversely to prices, fell 6 basis points to 2.89%, off from 2.91% before the report on gross domestic product. A basis point is 1/100th of a percentage point.
Yields on 2-year notes 2_YEAR -7.49% dropped 4 basis points to 0.39%.
Oil prices stall with U.S. debt talks
It’s been a dull week in the oil market, and that’s likely to continue until deadlocked talks to raise borrowing limits in the U.S. are resolved. Until then, the drama in Washington should overshadow other developments and keep prices in check.
Thirty-year bond yields 30_YEAR -1.03% declined 5 basis points to 4.21%.
The U.S. economy grew 1.3% in the second quarter, the Commerce Department said, but this was off a downwardly revised 0.4% growth rate in the first quarter. Read more on U.S. GDP.
The data added to worries that the uncertainty surrounding the debt ceiling and budget cuts out of Washington will weigh on the economy, pushing stock markets lower and also adding to the appeal of U.S. debt as an alternative — as counterintuitive as that may be.
Analysts noted that the lack of a deficit-reduction plan and risk of a credit downgrade for the U.S. are seen as positive by longer-term investors because spending cuts or a government shutdown will weigh on the economy while bondholders still get paid.
The mess in Washington and apparent willingness of lawmakers to accept a band-aid plan that only gets the government through a few months “will prove debilitating to business mentality, investor confidence, and an electorate that continues to worry about jobs, income and the future,” said strategists at CRT Capital Group. “And that, alas, will prove bond-bullish even with a AA-plus rating.”
No comments:
Post a Comment