Treasurys Extend Gains as Investors Seek Safer Assets

By Sam Goldfarb Features Dow Jones Newswires

U.S. government bond prices were on track for their third consecutive day of gains Friday, benefiting from weakness in global stocks and investors' concerns about terrorism and political instability.

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In recent trading, the yield on the benchmark 10-year Treasury note was 2.171%, compared with 2.197% Thursday. Yields fall when bond prices rise.

Having fallen over the first two days of the week, bond prices have since responded to a string of events, including minutes from the Federal Reserve's latest policy meeting, terrorist attacks in Spain, and discord in Washington following President Donald Trump's response to the violence in Charlottesville, Va.

Traders have bought bonds based on "concerns about the state of politics in America, concerns about terrorism risks abroad, concerns about equity market performance -- it's just a slew of these things," said John Herrmann, rates strategist at MUFG Securities in New York.

Treasurys typically benefit during times of political uncertainty, as investors lose some of their appetite for riskier assets such as stocks. In this case, bonds are also being supported by a run of soft inflation data, which have lowered expectations for future inflation and the path of interest-rate increases from the Fed.

Minutes from the Fed's July meeting released Wednesday reaffirmed that some officials are hesitant to raise interest-rates while inflation remains subdued.

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Federal-funds futures, used by investors to place bets on the Fed's rate-policy outlook, on Friday showed a roughly 36% chance of a rate-increase by December, down from 45% Thursday and 54% a month ago, according to CME Group data.

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

(END) Dow Jones Newswires

August 18, 2017 10:53 ET (14:53 GMT)