10-year Treasury yield pushes above 2.40%
Treasury prices fell, pushing up yields on Tuesday after a solid reading for housing data helped strengthen the outlook for the U.S. economy and set a bearish tone for early trading.
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What are Treasurys doing?
The benchmark 10-year Treasury note yield rose to 2.412%, up from 2.392% late Monday. The 2-year note yield edged higher to 1.840%, from 1.832%. The 30-year bond yield rose to 2.768%, versus 2.745%.
Bond prices move in the opposite direction of yields.
What's driving markets?
Housing starts for November rose 3.3% to an annual 1.297 million rate, outpacing MarketWatch economists' forecasts for an annual 1.25 million. This follows a stellar result in the home builder's index for December, which hit an 18-year high of 74 (http://www.marketwatch.com/story/home-builder-confidence-roars-to-an-18-year-high-2017-12-18).
Economists closely eye data on the housing sector as a change in its fortunes can have ripple effects across the broader economy. In addition, accommodation costs take up a significant chunk of the consumer-price index and inflation calculations.
The House is expected to vote on the final version of the tax overhaul later Tuesday, handing it to the Senate for a vote by Wednesday. After holdout Sens. Bob Corker, Susan Collins and Mike lee, signaled their support for the bill, market participants have upped the odds of the bill's passage. The legislation could send yields higher by stirring up short-term growth and inflation expectations, but so far the bill's renewed progress has had a muted impact on the bond market.
See: Here's why the stock market could peak the day Trump signs the tax-cut bill (http://www.marketwatch.com/story/heres-why-the-stock-market-could-peak-the-day-trump-signs-the-tax-cut-bill-2017-12-18)
Read: Opposition to Republican tax bill grows in poll | Russia investigation could last another year (http://www.marketwatch.com/story/opposition-to-republican-tax-bill-grows-in-poll-russia-investigation-could-last-another-year-2017-12-19)
What did market participants say?
"With home builders' confidence hitting 19-year highs of late, the risk is on the upside. Despite ebbing affordability, starts are well supported by sturdy income and demographic trends, lofty confidence and lean listings of resale homes," said Sal Guatieri, senior economist at BMO Capital Markets.
What else is on investors' radar?
Minneapolis Fed President Neel Kashkari will attend a moderated Q&A session in Roseville, Minn. at 1:10 p.m. Eastern. On Monday, he said he dissented against raising interest rates in the December Fed policy meeting in part because the gap between short-dated and long-dated yields had narrowed too much, a sign that the economy was nearing a downturn.
But some played down the importance of his comments, noting Kashkari wouldn't be a voting member of the Federal Open Market Committee next year.
(END) Dow Jones Newswires
December 19, 2017 08:47 ET (13:47 GMT)