BOND REPORT: Treasury Yields Fall Ahead Of ISM Manufacturing Survey Data

By Sunny Oh Features Dow Jones Newswires

Treasury yields ticked lower, but market activity was muted overall, as the July 4th weekend left trading desks lightly staffed. The Securities Industry and Financial Markets Association recommends bond markets to close early at 2 p.m. Eastern on Monday.

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See: July 4th: Which markets are closed? (http://www.marketwatch.com/story/july-4th-which-markets-are-closed-2017-06-30)

The yield for the 10-year bond dipped lower 0.4 basis point to 1.382%. The 30-year bond lost 0.8 basis point at 2.828%, while the 2-year note fell 0.8 basis point to 1.379%. Bond prices move up as yields go down; one basis point is one hundredth of a percentage point.

The mild bond buying helped to cap a selloff that dragged the benchmark Treasury yields higher by 20 basis points over the course of last week. European Central Bank and Bank of England policy makers rattled bond markets after they made hawkish statements suggesting a normalization of monetary policy could come sooner rather than later. Investors sold government paper with the market contagion spreading as far as Japan.

Also read: Global bonds sell off as central banks signal end to easy-money era (http://www.marketwatch.com/story/global-bond-yields-march-higher-as-easy-money-era-shows-age-2017-06-29)

But the selloff looked to have ran out of momentum by Monday. Analysts have attributed the touch of bullish activity to the opening of the China-Hong Kong Bond Connect that will give foreign investors another way to purchase Chinese debt.

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"Today's bounce back in global bonds could be a result of news that China has opened up its bond market," said Kathleen Brooks, research director at City Index Group. "This could be a temporary salve that eases fears about a rout in bond markets, at least in the short term."

The 10-year German government bond fell 2.4 basis points to 0.444%, while the Italian 10-year government bond dropped 4.2 basis points to 2.117%.

Looking ahead, the Institute for Supply and Manufacturing will issue their manufacturing index for June at 10 a.m. Eastern. At the same time, the Commerce Department will release construction spending data.

(END) Dow Jones Newswires

July 03, 2017 09:56 ET (13:56 GMT)