The selloff in U.S. Treasurys resumed on Monday, pushing yields higher, after Senate leaders reached a deal to end the government shutdown.
What are Treasurys doing?
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The yield for the 10-year benchmark Treasury note was up 2.4 basis points to 2.663%, according to WSJ Market Data Group.
The 2-year note yield was up 1.5 basis point to 2.073%, marking the 14th straight day of yield gains. The 30-year bond rate was up 1.4 basis point to 2.927%, the highest in close to three months.
Bond prices move in the opposite direction of yields.
What's driving Treasurys?
An agreement on Monday saw a resolution to the government shutdown. That put the factors that had led to last week's selloff back into the focus of investors. Concerns over higher inflation expectations, increased Treasurys issuance and a pullback of foreign investors are likely to weigh on bonds, said analysts.
See: Bond market braces for $ 1 trillion tsunami of Treasurys this year (http://www.marketwatch.com/story/bond-market-braces-for-1-trillion-tsunami-of-treasurys-this-year-2018-01-16)
The Bank of Japan is holding its two-day policy meeting this week, while the European Central Bank is set to begin their get-together on Thursday. In the backdrop of strengthening economic conditions, investors have raised the outlook for the central banks to tweak their policy guidance in preparation for a shift away from years of ultraloose monetary policy. Low interest rates elsewhere have kept U.S. bond yields depressed as foreign investors have plowed cash into the U.S. to snap up positive-yielding assets.
Read: BOJ and ECB expectations have trader hopes riding high for the yen and the euro (http://www.marketwatch.com/story/boj-and-ecb-expectations-have-trader-hopes-riding-high-for-the-yen-and-the-euro-2018-01-19)
What did market participants say?
"Overall, the markets have viewed the shutdown as a nonevent," said Charlie Ripley, senior investment strategist for Allianz Investment Management. "The inflation picture is starting to pick up again, we've had six months of flatline inflation, which appears to have taken a turn in December. Some of that's being priced into the bond market."
What's on investors' radar?
The Senate will hold a confirmation hearing for Marvin Goodfriend as governor of the Federal Reserve Board. He is a known critic of the central bank's bond-buying, but has shown an appetite for unconventional monetary policy such as the use of negative interest rates (https://www.kansascityfed.org//media/files/publicat/sympos/2016/econsymposium-goodfriend-paper.pdf?la=en).
A reading on the Chicago Federal Reserve's national activity index rose to 0.27 in December from 0.11 in November.
What other assets are on the move?
European and Japanese bonds showed muted trading ahead of the ECB and BOJ policy meetings. The yield for the German 10-year government bond, a proxy for the eurozone, was down 0.6 basis point at 0.502%. The Japanese 10-year government bond yield was little changed at 0.079%.
(END) Dow Jones Newswires
January 22, 2018 16:06 ET (21:06 GMT)
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