BOND REPORT: Treasury Yields Stabilize As Traders Ready For Fed's Yellen Speech

By Mark DeCambre, MarketWatch Features Dow Jones Newswires

10-year German bund yield at 0.406%

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U.S. Treasurys held their ground Tuesday, putting downward pressure on yields following a mixed bag of economic indicators, while investors awaited an afternoon speech from Federal Reserve Chairwoman Janet Yellen that could hint at the pacing of Fed rate hikes.

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 2.234% compared with 2.220% late Monday in New York, while the 2-year Treasury note yield rose 0.4 basis point to 1.432%, versus 1.425% Monday. The 30-year bond yield ticked up by 1.2 basis points to 2.775%, compared with 2.758% in prior session.

Bond prices and yields move in the opposite direction.

Earlier in the session, U.S. Case-Shiller home prices were reported to have risen 5.9% in July, compared with a 5.8% increase in June. Meanwhile, August new home sales slipped to 560,000, below the 585,000 consensus and 580,000 reported in July.

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September consumer confidence narrowly exceeded the MarketWatch consensus, coming in at 119.8, versus 119.5 expected and 120.4 in the previous month.

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

Yellen is speaking in Cleveland about inflation, uncertainty and monetary policy at 12:45 p.m. Eastern. Her speech comes less than a week after the Fed left interest rates unchanged but announced the October start of the historic unwind of its crisis-era, $4.5 trillion asset portfolio, as expected. It also kept the chances for a December rate hike alive, along with penciling in three more rate hikes in 2018.

Meanwhile, Cleveland Fed President Loretta Mester moderated a panel discussion on the global economic outlook, while Fed Gov. Lael Brainard addressed labor-market disparities at a separate event. 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 regional heads Mester and Bostic do not hold votes in 2017.

On the geopolitical front, the lack of fresh threats of conflict in the Korean Peninsula on Tuesday, 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).

Mounting military tensions and a surprise result in Germany's general election, helped to fuel overall haven 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 0.5 basis point higher at 0.408%, versus 0.399% in the prior session.

(END) Dow Jones Newswires

September 26, 2017 11:10 ET (15:10 GMT)