BOND REPORT: Treasury Yields Remain Higher As Investors Digest Economic Data
10-year Treasury yield lingers below 2.40%
Treasury yields remained higher Monday after a weak reading on a New York state manufacturing gauge.
The yield for the 10-year Treasury note advanced 0.9 basis point to 2.335%. Bond prices move in the opposite direction of yields, one basis point is equal to one hundredth of a percentage point.
The yield for the 30-year Treasury bond, or the long bond, rose 1.3 basis point to 3.000%, while the 2-year note added 0.8 basis point to 1.303%.
Yields gained as analysts said they expected better economic data in May. The Empire State Manufacturing Index, a monthly survey of health of manufacturers in New York state, fell to -1 in May from 5.2 in April, its first negative reading since October. Yields pared back from early gains in response to the survey.
The National Association for Home Builder's Housing Market Index, a gauge of confidence among American home builders, will come out at 10 a.m. Eastern.
After April's consumer-price index data came in lower than expected on Friday (http://www.marketwatch.com/story/us-consumer-prices-rebound-in-april-2017-05-12), economists showed some concerns over the prospect of a second quarter rebound in economic growth. Historically, economic indicators are soft in the first three months of the year due to a range of reasons like cold weather, before gaining strength again in the following three months.
Weak economic data has kept yields for 10-year notes at the bottom end of the trading range of 2.30% to 2.60%, which has confined yields since Donald Trump entered the White House. The bearish view appears even against the backdrop of a near-certain June rate hike, subsiding geopolitical jitters and an economy close to full employment (http://www.marketwatch.com/story/no-one-is-noticing-this-big-red-flag-for-the-stock-market-2017-04-12).
Hedge funds and speculators are now betting on yields to head lower, according to futures data. The Commodity Futures Trading Commission reported hedge funds and speculators were wagering on 10-year Treasury prices to head higher. The net speculative "long" exposure for 10-year Treasurys rose to 229,119 contracts in the week ending May 12, its highest levels since early 2008.
The surge in bullish sentiment for U.S. government paper comes after the CFTC showed "short" exposure, a measure of bearish bets, notched an all-time high on the week ending Feb 28.
(END) Dow Jones Newswires
May 15, 2017 09:41 ET (13:41 GMT)