BOND REPORT: Treasury Yields Slightly Higher Ahead Of Housing Starts Data

By Sunny Oh Features Dow Jones Newswires

Treasury yields were mostly unchanged Friday, bound by a tight range, as investors waited for housing starts data that could set the tone for the rest of the trading session.

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What are yields doing?

The 10-year Treasury note yield was up to 2.366%, from 2.361% on late Thursday. The 2-year note yield rose a basis point to 1.721% The 30-year bond yield rose 1.2 basis point to 2.816%.

Bond prices move in the opposite direction of yields

What's driving the market?

The U.S. economy has notched a spree of solid economic readings this week. Industrial production notched a stellar 0.9% rise in October (http://www.marketwatch.com/story/industrial-production-surges-in-october-tops-forecast-2017-11-16), suggesting manufacturers were picking up steam. Friday's housing starts number could help add to this bullish undertone and strengthen the Federal Reserve's case for raising interest rates in December. That could give the 2-year yield impetus to travel higher.

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Most investors were still keeping a steady eye on the tax bill, a key driver of the stock's market's gains and some of the bond market's losses. Treasurys, however, have remained resilient to the slow progress of the Republican plan to overhaul the U.S. tax code as market participants still held doubts about the Senate's ability to pass a comprehensive tax bill.

See: Republican Ron Johnson opposes current Senate tax bill (http://www.marketwatch.com/story/republican-ron-johnson-opposes-current-senate-tax-bill-2017-11-15)

What are analysts saying?

"We expect a reversal of hurricane effects to be evident in the housing starts data," said Jim O' Sullivan, chief U.S. economist for High Frequency Economics.

What's on investor's radar?

Housing starts in October is set to clock in at 8:30 a.m. Eastern. Economists surveyed by MarketWatch expect it to climb to 1.2 million from a September reading of 1.127 million. The Kansas City Fed Manufacturing Index, a gauge of local industrial activity, will come out at 11 a.m.

San Francisco Fed President John Williams will participate in a panel in Berkeley, Calif. His speech will be the last on the speaking docket that has seen a bevy of talk from central bankers on a range of topics including, the need for consensus in communicating Fed policy (http://www.marketwatch.com/story/feds-yellen-its-confusing-with-so-many-voices-on-the-fomc-2017-11-14), raising the inflation target and whether low-interest rates was fanning asset bubbles (http://www.marketwatch.com/story/harvard-economist-feldstein-sees-greater-chance-stocks-will-plunge-2017-11-16).

(END) Dow Jones Newswires

November 17, 2017 08:30 ET (13:30 GMT)