BOND REPORT: Treasury Yields Edge Lower, But On Track To Log Big Monthly Rise

By FeaturesDow Jones Newswires

Treasurys yields edged lower Friday, but were on track to log a big monthly rise as investors wrestle with prospects for a proposed U.S. tax overhaul and the Federal Reserve's commitment to normalize monetary policy despite signs of sluggish inflation.

What are bond yields doing?

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The benchmark 10-year Treasury yield fell 1.4 basis points to 2.295% after hitting an 11-week high earlier in the week. The shorter-dated 2-year note yield traded at 1.447% versus 1.455% Thursday afternoon. Meanwhile, the 30-year bond yield fell 0.9 basis point to 2.861%.

Bond yields move in the opposite direction of prices.

What is moving markets?

The personal-consumption expenditure, or PCE, index, the Federal Reserve's preferred inflation gauge, increased 0.1% in August (, while the closely followed core rate, which strips out food and energy, edged up by the same amount. Both measures were flat on a year-over-year basis.

Consumer spending rose just 0.1% in August after a 0.3% rise in July, matching expectations. Personal income climbed 0.2% versus a forecast of 0.1%.

President Donald Trump's tax proposal continues to dominate discussion, with members of the administration emphasizing that a proposed cut in the corporate income-tax rate to 20% isn't negotiable.

What are bond traders and strategists saying?

Strategists at Barclays led by Jason Goldberg in a Friday research note point out that the so-called term premium between 2-year and 10-year government bonds are at the widest in about 5 weeks. A wider spread between those maturities is often seen as a bullish indicator for financial companies, which borrow on a short-term basis and lend on a longer-term basis.

Which Federal Reserve speakers are ahead

Philadelphia Fed President Patrick Harker will give a speech at 11 a.m. Eastern on the economic outlook as well as on fintech at a conference at his regional bank.

What data are ahead?

Which other assets are moving?

The yield for the 10-year German bond , known as the bund, was at 0.453%, down 2.7 basis points. The sovereign paper is viewed as a gauge of the health of the European economy, because Germany is the largest eurozone economy.

(END) Dow Jones Newswires

September 29, 2017 09:35 ET (13:35 GMT)