U.S. Treasury Bond Prices Fall on Strong Data

By Akane Otani Features Dow Jones Newswires

U.S. government bond prices slipped Wednesday after data showed the country's manufacturers on strong footing.

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The yield on the benchmark 10-year U.S. Treasury note was recently at 2.455%, according to Tradeweb, compared with 2.406% Tuesday. Yields rise as bond prices fall.

Bond yields gained after data showed demand for long-lasting U.S. factory goods rose again in September, with new orders for durable goods rising a seasonally adjusted 2.2% in September from a month earlier, the Commerce Department said Wednesday.

Economists surveyed by The Wall Street Journal had expected new orders to rise by 0.8%.

The data signaled strength among manufacturers heading into the fourth quarter, analysts said, weakening demand for government bonds, whose prices tend to rise when investors are less certain about the economic environment.

"We've had a continuation of decent growth data around the world," said James Athey, senior investment manager at Aberdeen. That has helped keep Treasurys in a relatively narrow range for much of the year despite ebbs and flows in investors' confidence around policy changes in Washington, he said.

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Meanwhile, speculation around a potential change in leadership at the Federal Reserve also continued to swing the markets, some analysts said.

Bond yields closed above 2.4% for the first time in more than five months Tuesday as some investors considered the possibility that President Donald Trump would tap a hawkish candidate as his nominee for Fed chair.

Mr. Trump has narrowed the list of candidates to two front-runners, current Fed governor Jerome Powell and Stanford University economics professor John Taylor, a person familiar with the matter told The Wall Street Journal.

Some analysts and economists say a Fed led by Mr. Taylor, who has criticized the central bank's easy-money policies put in place after the financial crisis, may take a more aggressive approach to raising interest rates--something that could send bond yields higher.

"Markets are clearly set to deal badly with anyone other than Yellen if and when the president announces his candidate," said Jim Vogel, interest-rates strategist at FTN Financial, in a note Wednesday.

Write to Akane Otani at akane.otani@wsj.com

U.S. Treasury bonds slipped Wednesday, sending the yield on the 10-year note to its highest level since March, after data showed the country's manufacturers on strong footing.

The yield on the benchmark 10-year U.S. Treasury note settled at 2.444% -- the highest closing level since March 20 -- compared with 2.406% Tuesday. Yields rise as bond prices fall.

Bond yields climbed after data showed demand for long-lasting U.S. factory goods rose again in September, with new orders for durable goods rising a seasonally adjusted 2.2% in September from a month earlier, the Commerce Department said Wednesday.

Economists surveyed by The Wall Street Journal had expected new orders to rise by 0.8%.

The data signaled strength among manufacturers heading into the fourth quarter, analysts said, weakening demand for government bonds, whose prices tend to rise when investors are less certain about the economic environment.

"We've had a continuation of decent growth data around the world," said James Athey, senior investment manager at Aberdeen Standard Investments. That has helped keep Treasurys in a relatively narrow range for much of the year despite ebbs and flows in investors' confidence around policy changes in Washington, he said.

Meanwhile, speculation around a potential change in leadership at the Federal Reserve also continued to swing the markets, some analysts said.

Bond yields closed above 2.4% for the first time in more than five months Tuesday as some investors considered the possibility that President Donald Trump would tap a hawkish candidate as his nominee for Fed chair.

Mr. Trump has narrowed the list of candidates to two front-runners, current Fed governor Jerome Powell and Stanford University economics professor John Taylor, a person familiar with the matter told The Wall Street Journal.

Some analysts and economists say a Fed led by Mr. Taylor, who has criticized the central bank's easy-money policies put in place after the financial crisis, may take a more aggressive approach to raising interest rates -- something that could send bond yields higher.

The yield on the two-year U.S. Treasury note, which tends to be more sensitive to interest-rate expectations, notched its sixth advance in eight sessions Wednesday, settling at 1.608%, compared with 1.575% Tuesday.

"Markets are clearly set to deal badly with anyone other than [Fed Chairwoman Janet] Yellen if and when the president announces his candidate," said Jim Vogel, interest-rates strategist at FTN Financial, in a note Wednesday.

Write to Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

October 25, 2017 16:24 ET (20:24 GMT)