U.S. Bonds Higher After Contentious Speech From Trump
the White House pressured stocks while stoking demand for assets seen as safer stores of value.
The yield on the benchmark 10-year U.S. Treasury note settled at 2.171% compared with 2.215% Tuesday. Yields fall as bond prices rise.
Stocks fell, while assets viewed by investors as havens like government bonds and gold climbed, after President Donald Trump said Tuesday evening that he would shut down the government if necessary to secure funding to build a wall along the southwest border.
Speaking at his first rally after a violent white supremacist protest in Charlottesville, Va., Mr. Trump also attacked his GOP colleagues for their failure to repeal and replace the Affordable Care Act and said he might terminate the North American Free Trade Agreement.
"The rhetoric and belligerence out of Washington is a gift that keeps on giving" to the bond market, said Bryce Doty, a senior portfolio manager at Sit Investment Associates. "It creates a quality opportunity every couple of days for investors."
Still, any rebound in the bond market is likely to be short-lived, investors and analysts say. Treasurys have largely traded in a narrow range this summer even after developments such as a flare-up in tensions between North Korea and the U.S., White House staffing changes and fallout in the business community over Mr. Trump's response to the Charlottesville protests.
In another sign of a lull in the bond market, a measure of expected volatility in the Treasury market -- the Bank of America Merrill Lynch MOVE Index -- fell to an all-time low earlier this month, and has traded near that level since then.
The real risks to the Treasurys market, many say, won't come until next month, when the Federal Reserve is expected to begin reducing its massive portfolio of bonds and other assets, and possibly offer additional clues on the path for interest-rate increases. For most of the year, investors have been betting that soft inflation would keep the Fed from aggressively backing out of its stimulus program.
Until there is more clarity on how the Fed plans to act, "we probably won't see much shake-up," Mr. Doty said.
Write to Akane Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
August 23, 2017 15:38 ET (19:38 GMT)