U.S. government bonds strengthened Tuesday as investors flocked to assets traditionally considered safe, like Treasurys and gold.
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The yield on the benchmark 10-year Treasury note dipped to 2.089% in early trading, according to Tradeweb, compared with 2.157% on Friday. Yields fall as government bond prices rise.
The yield on the 10-year note was on track to settle at its lowest level since Nov. 9, 2016, the day after the U.S. presidential election. The decline marks a continuation of strong demand for government debt after the 10-year yield fell in August for a second consecutive month.
Early Tuesday, investors reacted to geopolitical stresses that emerged over the weekend, preparing for what could be a month fraught with risks, some investors and analysts said. Those include tensions between North Korea and the U.S., which appeared to escalate as Pyongyang detonated its most powerful nuclear device.
Major U.S. stock indexes fell on Monday. Gold prices were up 0.8% to $1340.80 a troy ounce.
Investors are facing "a month of a lot of risks," said John Briggs, head of strategy at NatWest Markets.
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Treasury investors were also watching events in Washington, D.C., with lawmakers returning from a summer break and the Trump administration seeking approval for a $7.85 billion recovery package for Hurricane Harvey. Congress also needs to pass spending bills to avoid a government shutdown and raise the U.S. government's borrowing limit to avoid default on the nation's debt even as President Donald Trump's uncertain relationship with Senate Republicans injects greater unpredictability to these efforts, some analysts said.
The move in yields "is based more on what's going on in Asia and the potential for some stalemates in Washington," said Scott Buchta, head of fixed-income strategy at Brean Capital.
Yields on government debt expiring in October remain elevated over notes expiring in November, according to Tradeweb, indicating heightened anxiety over the debt ceiling deadline. Bonds with longer maturities typically yield more than those due sooner.
Minneapolis Fed President Neel Kashkari and Dallas Fed chief Robert Kaplan are scheduled to speak Tuesday. The Federal Reserve's beige book, a widely watched report on U.S. economic conditions, is due for release on Wednesday.
Write to Gunjan Banerji at Gunjan.Banerji@wsj.com
Corrections & Amplifications
This article was corrected at 12:27 p.m. ET because the original version misstated the date as Monday instead of Tuesday in the first sentence.
U.S. government bonds strengthened Tuesday as investors flocked to assets traditionally considered safe, like Treasurys and gold. "Government Bonds Strengthen" at 12:17 p.m. ET misstated the date.
(END) Dow Jones Newswires
September 05, 2017 12:40 ET (16:40 GMT)