Treasurys Extend Recent Gains

By Sam Goldfarb Features Dow Jones Newswires

U.S. government bonds extended recent gains Friday as muted inflation expectations continued to support government debt on both sides of the Atlantic.

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In recent trading, the yield on the benchmark 10-year Treasury note was 2.243%, according to Tradeweb, compared with 2.266% Thursday.

Yields, which fall when bond prices rise, have declined steadily over the past two weeks as soft inflation data eased concerns about major central banks potentially tightening their monetary policies.

A European Central Bank survey released Friday showed professional forecasters see annual inflation in the eurozone running at 1.5% this year, 1.4% next year and 1.6% in 2019, all below the ECB's 2% target and 0.1 percentage point reductions from the previous survey conducted in April.

The report came one day after the ECB held its interest-rate policy and bond-buying program steady. In a news conference following the meeting, ECB President Mario Draghi said he didn't see convincing signs of inflation picking up, suggesting that stimulus could remain in place at least through 2018.

In recent trading, the yield on the 10-year German bond was hovering around 0.500%, according to Tradeweb, after settling at 0.538% Thursday.

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Mr. Draghi on Thursday was "a little more dovish than what market participants were looking for," said Mary Ann Hurley, vice president of fixed-income trading at D.A. Davidson.

Also Thursday, the Bank of Japan left its bond-buying program unchanged but pushed back the date when it expects 2% inflation.

Bond buying from the ECB and the BOJ has played a large role in pushing down government-bond yields in the developed world to historically low levels.

Analysts have warned that the value of government bonds would fall when these central banks reduce purchases.

Write to Sam Goldfarb at sam.goldfarb@wsj.com

(END) Dow Jones Newswires

July 21, 2017 10:39 ET (14:39 GMT)