BOND REPORT: Treasurys Claw Rebound After Senate Tax Bill Hits Speed Bump

By Sunny Oh Features Dow Jones Newswires

Treasury prices rose, pulling yields lower, on Friday after the Senate tax bill hit snags, delaying a floor vote that had been expected a day earlier.

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What are yields doing?

The 10-year benchmark note yield fell 3.7 basis points to 2.380%. The 2-year Treasury note yield was barely unchanged at 1.778% The 30-year bond yield shed 5.6 basis points to 2.781%,

Bond prices move in the opposite direction of yields.

What's driving Treasurys?

Senate Republicans had to delay their tax vote as they will need to overcome a parliamentary hurdle and mollify Republican deficit hawks, after the nonpartisan Joint Committee on Taxation said the bill would widen budget deficit by around $1 trillion over a decade. The 11th-hour hiccup has drawn concerns over the viability of the current version of the Senate tax cuts. But a final vote could still come Friday.

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See: Here's what's next for the Senate's tax bill (http://www.marketwatch.com/story/heres-whats-next-for-the-senates-tax-bill-2017-11-30)

A new bill that was closer to becoming deficit-neutral would allay concerns that the Treasury Department will have to increase the size of their debt auctions, weighing on bond prices.

Read: Ron Johnson reportedly to vote for tax bill (http://www.marketwatch.com/story/ron-johnson-reportedly-to-vote-for-tax-bill-2017-12-01)

What did market participants say?

"In classic Washington style, the Senate tax reform bill has shifted from a forgone conclusion to an open question--to put it diplomatically. The issue comes down to the fact that the tax cuts won't pay for themselves," wrote Ian Lyngen and Aaron Kohli, fixed-income strategists for BMO Capital Markets.

What else is on investors' radar?

The Institute for Supply Management will publish their November reading for their manufacturing composite index, a measure of nationwide industrial activity, at 10 a.m. Eastern. Economists surveyed by MarketWatch forecast 58. Construction spending is expected to rise 0.4% in October.

Investors will look forward to a busy docket of speakers from the Federal Reserve. Dallas Fed President Robert Kaplan will take part in a moderated Q&A at 9:30 a.m. Eastern. St. Louis Fed President James Bullard is set to speak at 9:05 a.m. Philadelphia Fed President Patrick Harker will talk at 10:15 a.m.

(END) Dow Jones Newswires

December 01, 2017 09:57 ET (14:57 GMT)