Treasurys Gain on Debt-Limit Deal

By Ira Iosebashvili Features Dow Jones Newswires

U.S. government bonds strengthened Thursday, as investors continued to weigh a deal between President Donald Trump and Democratic leaders on a short-term extension of the federal government's borrowing limit.

Continue Reading Below

The yield on the benchmark 10-year Treasury note was recently at 2.061%, according to Tradeweb, compared with 2.108% on Wednesday. Yields fall while bond prices rise.

Under an agreement reached at the White House on Wednesday, lawmakers would extend both the debt limit and government funding until Dec. 15, while providing an initial installment of aid to victims of Hurricane Harvey.

Investors initially viewed the deal as bearish for Treasury markets, a popular haven that had benefited from fears of either a debt-ceiling breach or a government shutdown.

At the same time, the deal hasn't yet been approved by Congress, and may run into resistance from Republican lawmakers, analysts at BMO Capital Markets said in a note to clients. Its timing also will make it difficult for the Federal Reserve to raise rates at its December meeting, the note said.

Treasurys were also aided by news that South Korea expects North Korea to launch an ICBM on Saturday, analysts at NatWest Markets said. Other popular havens, such as gold and the yen, also rose.

Continue Reading Below

Write to Ira Iosebashvili at ira.iosebashvili@wsj.com

(END) Dow Jones Newswires

September 07, 2017 10:57 ET (14:57 GMT)