'Super Thursday' also brings ECB decision, U.K. election
Treasury prices slid, pushing up yields, as traders looked past an ECB policy meeting and former Federal Bureau of Investigation chief James Comey's testimony in front of a Senate panel to concentrate on a near-certain rate hike next week, which could pare demand for U.S. government paper.
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The yield on the benchmark 10-year note added 1.6 basis points to 2.195%. Bond prices move in the opposite direction of yields; one basis point is a hundredth of a percentage point. The yield on the 2-year note rose 0.8 basis point to 1.322%, while the yield on the 30-year bond, or the long bond, gained 1.6 basis point to 2.854%.
Yields headed higher after Comey, gave testimony to the Senate Intelligence Committee, which followed the release of his prepared remarks late Wednesday (http://www.marketwatch.com/story/full-text-of-comeys-prepared-senate-testimony-2017-06-07).
Read:Here are the key takeaways from Comey's testimony (http://www.marketwatch.com/story/here-are-the-key-takeaways-from-comeys-testimony-2017-06-08)
"There's not really anything here. There's no smoking gun," said Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities.
The Senate is investigating President Donald Trump's firing of Comey after the bureau inquired into possible Russian interference in the U.S. presidential election in 2016.
Yields rose in overnight sessions as traders took the opportunity to sell at relatively rich levels after having fallen to its lowest since Nov. 10 on last Friday. They said the proximity of Treasury auctions next week to the Federal Reserve's policy meeting on June 13 and June 14, where a rate increase is expected, could encourage a selloff of U.S. government paper.
"The market will start to concentrate on supply next week and the FOMC meeting, and start repricing. You also have a lot of flight to quality buying that gets unwound that happened ahead of this Comey testimony and the U.K. elections," said di Galoma.
The Treasury Department will auction off more than $84 billion of U.S. government paper next week right before the rate decision, which could drive yields higher. The new supply would need to be discounted to match the higher-returns of bonds issued after the widely anticipated rate hike.
Treasury yields then briefly slipped in morning trading before climbing again after the European Central Bank policy meeting (http://www.marketwatch.com/story/the-ecb-just-took-a-baby-step-toward-reducing-stimulus-2017-06-08), part of the bevy of potentially market-moving events that some on Wall Street has dubbed "Super Thursday." The ECB's somewhat dovish note spurred bond buying as the interest rate gap between the higher-yielding U.S. and lower-yielding Europe would be maintained, holding up the appeal of American debt to foreign investors.
"Yields pulled back based on Mario Draghi's comments as he continues to be very dovish as to when the ECB might be paring back their bond buying program, investors were a little disappointed on that aspect," said Charles Ripley, an investment strategist for Allianz Investment Management.
ECB policy makers left interest rates unchanged and took out a reference that rates could head even lower, but said they would continue to hover at current levels for an "extended period of time."
European government bonds rallied after the ECB meeting as Draghi highlighted the weak inflation outlook in the eurozone, weakening the case for paring back its quantitative easing program. The yield for the 10-year French government slipped 2.9 basis points to 0.659%, while the German 10-year bond, or the bund, dipped 1.8 basis point to 1.322%.
The U.K. is currently holding a general election (http://www.marketwatch.com/story/5-things-to-know-about-the-uk-general-election-next-week-2017-06-01) and the results will be known by Friday morning. Opinion polls (http://www.marketwatch.com/story/uk-voters-hit-the-polls-buzzed-by-uncertainty-of-the-outcome-2017-06-08) now show the gap between the Prime Minister Theresa May's Conservatives and the opposition Labor Party has narrowed considerably. But analysts expect May to emerge with a slim majority in parliament.
Also see: U.K. stocks sag as British voters head to the polls (http://www.marketwatch.com/story/uk-stocks-wobble-as-british-voters-head-to-the-polls-2017-06-08)
On the data front, initial jobless claims fell by 10,000 from 245,000 (http://www.marketwatch.com/story/us-jobless-claims-drop-10000-to-245000-2017-06-08)in the week ending June 3. The four-week average of new filings for unemployment benefits, however, rose by 2,250 to 242,000.
(END) Dow Jones Newswires
June 08, 2017 15:56 ET (19:56 GMT)