BOND REPORT: Treasurys Hold Ground In Postholiday Trading

By Sunny Oh Features Dow Jones Newswires

Treasury yields kept steady on Tuesday as market participants expect trading volumes to be thin in the week following Christmas.

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European markets, including the U.K.'s, are closed on Dec. 26 (http://www.marketwatch.com/story/when-do-financial-markets-close-for-christmas-2017-12-20).

What are Treasurys doing?

The 10-year Treasury note yield was flat at 2.487%, from 2.486% on last Friday. The 2-year note yield was slightly higher at 1.903%, from 1.894%. While, the 30-year bond ticked a basis point higher to 2.841%, compared with 2.833%.

Bond prices move in the opposite direction of yields.

What's driving markets?

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With few major economic reports set for this week, the highlight for traders and investors are the incoming supply of short-term paper. The Treasury Department will sell $26 billion of 2-year notes at 1 p.m. Eastern on Tuesday, but investors say the auction is likely to perform poorly as trading desks will be understaffed. Fresh issuance can influence appetite for bonds in the outstanding market.

What are market participants saying?

"Treasury supply should be a negative factor for the market as there are a limited number of counterparties around to take down the new issues," wrote Tom di Galoma, managing director for Treasurys trading at Seaport Global Securities.

What else is on investors' radar?

Across the day, investors will see snapshots of regional industries. The Richmond Fed manufacturing Index will come out at 10 a.m. Eastern. Soon after, the Dallas Fed manufacturing survey will come out at 10:30 a.m.

Meanwhile, Case-Shiller home prices for October are set to be released at 9 a.m. Eastern Time.

What assets are on the move?

Japanese government bonds struggled for direction after Japan's inflation rate rose 0.9% year-over-year (http://www.marketwatch.com/story/japanese-inflation-creeps-toward-2-target-2017-12-26) in November, accelerating from the 0.8% increase seen in October. But the improvement in inflation data remains gradual, and well below the central bank's 2% annual target.

The 10-year Japanese government-bond yield stood at 0.039%.

(END) Dow Jones Newswires

December 26, 2017 08:50 ET (13:50 GMT)