BOND REPORT: Treasury Selloff Abates After Raft Of Economic Data
Treasury prices ticked higher, pulling yields lower, on Thursday helped to ease the bearish tilt of the bond market.
What are Treasurys doing?
The 10-year Treasury note yield fell 1.5 basis point to 2.484%. The 2 -year note yield was up 0.4 basis point to 1.865%. The 30-year bond yield declined 1.4 basis point to 2.864%.
Bond prices move in the opposite direction of yields.
What's driving markets?
Tepid economic data led by a weaker third-quarter GDP reading helped to draw a bid in Treasurys. After the 10-year Treasury yield touched 2.50%, modest bond-buying pushed long-term yields down as overseas investors looked to buy debt at more attractive prices.
With most of the tax bill out of the way, portfolio managers may also be rushing out to complete year-end purchases to match their portfolio's duration with their benchmark bond indexes. Thin trading ahead of the holidays have kept investors on edge as purchases of large blocks of government paper can move markets more than expected.
What did market participants say?
"There was decent bargain hunting once again as 10 year yield approached 2.5%," wrote Tom di Galoma, managing director of Treasurys trading for Seaport Global Securities. "Year-end momentum and illiquidity seems to be a substantial factor at the moment."
What else is on investors' radar?
New claims for unemployment benefits rose 20,000 to 245,000 (http://www.marketwatch.com/story/jobless-claims-jump-by-most-since-early-september-2017-12-21) in the week ending Dec. 16. Third-quarter GDP was cut to 3.2% from 3.3%, thanks to downward revisions to consumption spending. But some economists were encouraged by the pace of growth, leading some to pencil in higher forecasts for fourth-quarter GDP.
See: Third-quarter GDP revised down slightly to 3.2% rate (http://www.marketwatch.com/story/third-quarter-gdp-revised-down-slightly-to-32-rate-2017-12-21)
Barometers of local economic activity were mixed. The Chicago Fed National Activity Index (http://www.marketwatch.com/story/chicago-fed-economic-index-cools-from-octobers-best-reading-in-nearly-a-decade-2017-12-21)fell to 0.15 in November from 0.76 in the previous month. The Philadelphia Fed's manufacturing survey (http://www.marketwatch.com/story/philly-fed-index-shows-accelerating-factory-momentum-in-december-2017-12-21)rose to 26.2 in December from 22.7 in November.
What other assets are on the move?
The Bank of Japan (http://www.marketwatch.com/story/bank-of-japan-keeps-rates-steady-gives-no-hint-of-future-changes-2017-12-20)kept rates and its policy stance unchanged after its Thursday policy meeting, frustrating the expectations of investors who had speculated the central bank would lift its yield targets in a bid to finally ease off ultra-accommodative monetary policy.
Japan's 10-year government bond yield added 0.9 basis point to 0.054%.
(END) Dow Jones Newswires
December 21, 2017 09:58 ET (14:58 GMT)