Treasurys Pull Back After Recent Gains

By Sam Goldfarb Features Dow Jones Newswires

The yield on the benchmark 10-year U.S. government note edged higher Wednesday after falling to a fresh 2017 low Tuesday, as investors took a pause ahead of potentially market-moving events.

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In recent trading, the yield was 2.159%, according to Tradeweb, compared with 2.147% Wednesday -- its lowest close since Nov. 10. Yields rise as bond prices fall.

Demand for bonds in recent days has partially reflected investors' caution ahead of a trio of events Thursday, with a European Central Bank meeting, the U.K. general election and congressional testimony from ex-FBI Director James Comey.

Investors have also been lowering their expectations for economic growth and inflation, stemming from soft data and dimming prospects for fiscal stimulus out of Washington.

The 10-year yield has fallen more than 0.4 percentage point since climbing above 2.6% in early March.

Investors still expect the Federal Reserve to raise short-term interest rates at its next meeting June 13-14. But many expect a long pause after that, especially given the central bank's plans to start unwinding its balance sheet later in the year.

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To some extent, the recent bond rally could reflect "an outright protest" by bond investors "who don't think the Fed should be raising rates in a very low inflationary environment," said Ray Remy, head of fixed-income trading in New York at Daiwa Capital Markets America Inc.

One factor that could depress bond prices in the near term is looming debt supply, according to analysts.

Auctions of three-year and 10-year notes are set to take place Monday followed by a sale of 30-year bonds on Tuesday.

Write to Sam Goldfarb at

(END) Dow Jones Newswires

June 07, 2017 10:53 ET (14:53 GMT)