BOND REPORT: Treasury Yields Extend Last Week's Slide As Investors Look Ahead To Tax Bill
The House is planning to get the tax bill out for a vote by Thursday
Treasury yields edged lower on Monday as investors monitored the progress of the tax bill, which investors fear will widen the budget deficit and increase the amount of new issuance hitting the market next year.
What are Treasury yields doing?
The 10-year Treasury yield fell to 2.317%, from 2.343%. The 2-year yield edged lower to 1.617%, from 1.624%, while the 30-year ticked down to 2.796%, versus 2.822%.
Bond prices move inversely to yields.
What is driving markets?
Tax reform continues to make strides. The House's Ways and Means committee is planning to vote on the tax bill vote by Thursday, with reports suggesting the Republican leadership would prevent any amendments to the bill from taking place. Bondholders are worried tax cuts will widen the budget deficit and increase the amount of new issuance hitting the market next year, weighing on prices.
See: Here's a breakdown of how the new House tax bill impacts business taxes (http://www.marketwatch.com/story/heres-a-breakdown-of-how-the-new-house-tax-bill-impacts-business-taxes-2017-11-02)
Read: How Trump's tax bill will impact America's middle class (http://www.marketwatch.com/story/how-the-gop-tax-bill-will-impact-middle-class-and-wealthy-taxpayers-2017-11-03)
What are strategists saying?
"The idea is to convince those who might not like key provisions to vote for the bill anyway to carry a legislative success into mid-term elections. In that hot house environment, it's understandable why bond investors might play the bond market with a lower-risk, neutral approach," said Jim Vogel, interest-rate strategist for FTN Financial.
What else was in focus?
What other assets were in focus?
Japanese government bonds rallied after Bank of Japan Gov. Haruhiko Kuroda said he had confidence that the central bank's yield-curve control policy, which aims to keep the 10-year yield close to zero, could push inflation to its 2% target. The Japanese 10-year government bond yield slipped 3 basis points to 0.019%.
(END) Dow Jones Newswires
November 06, 2017 10:08 ET (15:08 GMT)