BOND REPORT: Treasury Yields Rebound From Five-month Lows

By Sunny Oh Features Dow Jones Newswires

Treasury yields edged off a five-month low on Wednesday even as geopolitical uncertainty and a weak outlook for the U.S. economy dominate the market conversation.

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Treasury yields for the 10-year note jumped 3.5 basis points to 2.208%, after trading around 2.16% late Tuesday in New York. Yields for the 2-year notes gained 1.6 basis point rose at 1.185%, while yields for the 30-year Treasury bond picked up 2.8 basis points to rose 2.867%.

Bond prices move in the opposite direction as yields; one basis point is one hundredth of a percentage point.

Lingering geopolitical concerns after Theresa May declared a snap election to strengthen her hand at the negotiating table when she asks to leave the E.U. Analysts said weak economic data including the first fall in consumer price inflation in seven years has driven a more bullish outlook on U.S. government paper. Yields have plummeted over the last two weeks as investors cut inflation numbers as economic growth appears to falter.

But the unbroken streak of yield declines had caused some investors to balk at the growing price-tag of Treasurys. Instead, market strategists said some traders were cashing out of their bondholdings as prices have risen on recent haven buying.

"We've had a pretty fierce rally, it's been virtually relentless. We honestly were expecting a consolidation pattern. Now we're just seeing the delayed reaction to the speed of the move," said Aaron Kohli, an interest-rate strategist at BMO Capital Markets. "You're seeing the yields stabilize," he said.

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Boston Fed President Eric Rosengren, a nonvoting member of the central bank's interest-rate setting committee, is slated to speak at Bard College at 12:30 p.m. Eastern.

The Federal Reserve will release its Beige Book report on economic conditions at 2 p.m. Eastern, which could inform the central bank's thinking on whether or not to continue with its schedule of two or more rate increases this year as hard data deteriorates and traders price in lower expectations of a rate hike in June.

(END) Dow Jones Newswires

April 19, 2017 11:18 ET (15:18 GMT)