BOND REPORT: Treasurys Hold Steady Ahead Of ECB Policy Decision; BOJ Stands Pat

By Mark DeCambre, MarketWatchFeaturesDow Jones Newswires

Treasury yields on Thursday held their ground as the market awaits a key decision from the European Central Bank, which could offer clear signs that it intends on rolling back, at least gradually, an era of easy-money policies.

The language of the ECB's statement and remarks by central-bank President Mario Draghi will be of particular focus for fixed-income investors.

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The 10-year Treasury yield was little changed at 2.274%, compared with 2.268% late Wednesday in North American trade. The 2-year Treasury note stood flat at 1.356%, while the yield on the 30-year Treasury bond , known as the long bond, held relatively steady at 2.844%, versus 2.846% on Wednesday.

Bond prices move inversely to yields.

Earlier in Asian trade, the Bank of Japan lifted its economic growth forecasts, but pushed back on inflation goals. The Japanese central bank now expects inflation to reach around 2% by March 2020, which is one year later than its prior forecast.

The BOJ may moves come as central bankers more broadly, notably Draghi & Co.., have been signaling a desire to gradually taper measures to support their respective economies in the wake of the 2008-'09 financial crisis, which rocked global markets.

The euro and European bond yields, along with Treasurys in the U.S., have been mostly climbing in the wake of recent comments from Draghi in Sintra, Portugal on June 27. That's when he appeared to hint at taking his foot off the pedal of ECB asset purchases, which are currently running at EUR60 billion ($69 billion) a month at least through December.

Check out:Why Mario Draghi can't back down from ECB taper hints (

Although investors aren't expecting Draghi to immediately assume the hawkish stance his earlier statements suggested, he may lay the groundwork for subtle policy shifts that communicate the central bank's growing confidence in the eurozone economy, despite stubbornly low inflation.

"Mario Draghi's speech in Sintra started to steer the ECB towards a reduction in monetary accommodation," wrote fixed-income analysts at UniCredit Research in a Thursday research note.

"We expect today's monetary policy meeting to confirm our view that September will be the right time for a tapering announcement. However, Mr. Draghi will probably want to convince markets that stimulus withdrawal, when it comes, will be gradual," the note said.

European bonds, also are holding steady, with yields on German 10-year bonds , known as bunds, holding at 0.56%. Meanwhile, the euro against the dollar was at $1.1498, compared with $1.1516 late Wednesday in New York.

(END) Dow Jones Newswires

July 20, 2017 07:46 ET (11:46 GMT)