BOND REPORT: Treasury Yields Higher After Solid GDP Data Meets Expectations

By Sunny Oh Features Dow Jones Newswires

Federal Reserve Chairwoman Janet Yellen will testify on the economic outlook in front of Congress at 10 a.m. Eastern

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Treasury yields extended the prior session's rise on Wednesday after fresh economic data that helped support the outlook for a December rate increase.

What are yields doing?

The 2-year Treasury note yield was unchanged at 1.758% from late Tuesday. The 10-year note yield was up to 2.350%, from 2.338%. The 30-year bond yield ticked up to 2.790%, versus 2.767%.

Bond prices move in the opposite direction of yields.

What's driving Treasurys?

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The third-quarter revised GDP number came in at 3.3% (http://www.marketwatch.com/story/us-third-quarter-gdp-raised-to-33-fastest-economic-growth-in-three-years-2017-11-29), matching forecasts. The solid growth data was underpinned by the boost in capital investment spending, rising 10.4% instead of 8.6%. Analysts suggest such strong growth numbers could solidify the chance of the Federal Reserve approving a December rate increase, which is nonetheless widely expected.

See: MarketWatch Economic Calendar (http://www.marketwatch.com/Economy-Politics/Calendars/Economic)

Republicans on the Senate Budget Committee advanced a tax bill (http://www.marketwatch.com/story/senate-budget-committee-advances-republican-tax-bill-on-party-lines-2017-11-28). That could open the door for a floor vote as soon as this week. Investors say the bill is gaining traction as previous skeptics within the Senate Republicans ranks said they were optimistic about supporting the legislation.

What did market participants say?

"Capital market behavior will become increasingly important as investors decide how to play the Senate tax vote this week and the big Washington negotiations scheduled for December. Yesterday's U.S. stock boom was widespread, leaving tech the lone holdout, an indication of tax reform optimism," said Jim Vogel, interest-rate strategist for FTN Financial.

What else is on investor's radar?

Federal Reserve Chairwoman Janet Yellen will testify on the economic outlook in front of Congress at 10 a.m. Eastern. In her prepared text, she said U.S. growth was picking up steam, but would stay capped by the inertia of weak productivity and a tightening slack in the labor markets. It was, therefore, up to Congress to pass policies that would improve the nation's economic prospects.

Read: As the Yellen era draws to a close, investors give the Fed a B grade (http://www.marketwatch.com/story/as-the-yellen-era-draws-to-a-close-investors-give-the-fed-a-b-grade-2017-11-28)

New York Fed President William Dudley is speaking at New Brunswick. San Francisco Fed President John Williams will give a keynote address at Phoenix at 1:50 p.m.

(END) Dow Jones Newswires

November 29, 2017 09:04 ET (14:04 GMT)