BOND REPORT: Treasury Yields Stabilize As Traders Brace For Data, Fed Speakers

By Mark DeCambre, MarketWatch Features Dow Jones Newswires

10-year German bund yield at 0.405%

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U.S. Treasurys held their ground Tuesday, leaving yields little changed as investors awaited a spate of data and a speech from Federal Reserve Chairwoman Janet Yellen in the afternoon, among a number of central bank speakers on tap, which could shape the day's trading action.

On Monday, escalating tensions sparked by a flare-up in aggressive rhetoric between the U.S. and North Korea inspired some buying in so-called haven assets, including gold futures and government paper.

The benchmark 10-year Treasury yield was at 2.219% in early trade, compared with 2.220% late Monday in New York, while the 2-year Treasury note yield rose 0.7 basis point to 1.432%, versus 1.425% Monday. The 30-year bond yield ticked up by 0.4 basis point to 2.762%, compared with 2.758% in prior session.

Bond prices and yields move in the opposite directions.

No fresh threats of armed conflict in the Korean Peninsula after Pyongyang's foreign minister issued a warning in New York on Monday that his country would shoot down U.S. warplanes even if they were outside the nation's airspace, helped to check further bond buying. The U.S. has dismissed North Korea's claim that recent comments over twitter from President Donald Trump represented a declaration of war (http://www.marketwatch.com/story/north-korean-official-says-us-has-declared-war-2017-09-25-13103598).

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Mounting military tensions and a surprise result in Germany's general election, helped to fuel overall buying sentiment on Monday, pressuring yields. Although German Chancellor Angela Merkel's center-right Christian Democrats came in first in the country's weekend election, support for her party fell, while antiestablishment parties increased their profile, raising questions about the political landscape in Germany and the integrity of the euro and the European Union.

Read:German election result revives eurozone jitters as investors turn attention to Spain (http://www.marketwatch.com/story/german-election-result-revives-eurozone-jitters-as-investors-turn-attention-to-spain-2017-09-25)

The German 10-year government bond, or bund, a proxy for eurozone health edged 0.6 basis point higher at 0.405%, versus 0.399% in the prior session.

Fixed-income investors will be bracing for gauges of U.S. economic health, including the U.S. home-price index reading for July due at 9 a.m. Eastern Time and August data on new home sales set for 10 a.m. Eastern. Economists polled by MarketWatch forecast that 585,000 new homes were sold.

A reading of consumer-confidence for September is slated for 10 a.m. Eastern, with an average estimate of economists polled by MarketWatch indicating a reading of 119.5.

Check out:MarketWatch's Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)

On the Federal Reserve front, Yellen is speaking in Cleveland about inflation, uncertainty and monetary policy at 12:45 p.m. Her speech comes less than a week after the Fed left interest rates unchanged Sept. 20, but announced the October start of the historic unwind of its crisis-era, $4.5 trillion asset portfolio, as expected.

Meanwhile, Cleveland Fed President Loretta Mester is due to moderate a panel discussion on the global economic outlook at 9:30 a.m. Eastern in Cleveland, and Fed Gov. Lael Brainard is slated to discuss labor-market disparities at 10:30 a.m. in Washington, D.C. Atlanta Fed President Raphael Bostic is set to deliver a speech on the economic outlook and monetary policy in Atlanta at 12:30 p.m. Eastern.

Brainard is a voting member of the Fed, while Mester and Bostic aren't presently.

(END) Dow Jones Newswires

September 26, 2017 08:39 ET (12:39 GMT)