U.S. Government Bonds Slip as Irma Weakens

U.S. government-bond prices slipped Monday, as investors piled into riskier assets like stocks.

The yield on the 10-year U.S. Treasury note settled at 2.125% compared with 2.058% on Friday. Yields rise as bond prices fall.

Yields on the benchmark 10-year note posted their biggest one-day gain since July 25 after early estimates suggested damage from Hurricane Irma would be less severe than analysts had initially feared.

Concerns over the hurricane, which made landfall in the U.S. before being downgraded to a tropical storm, had sent Treasury yields to fresh lows for the year last week. Bond yields had also fallen after some analysts warned that North Korea could launch another intercontinental ballistic missile over the weekend -- a development that would have renewed fears of an escalation in the country's nuclear program.

The fact that there appeared to be no such launch, and that analysts have downgraded their hurricane damage estimates, helped stoke appetite for stocks on Monday while putting pressure on assets seen as safer stores of value, said Dan Heckman, senior fixed-income strategist at U.S. Bank Wealth Management. Treasurys, alongside assets like gold and the Japanese yen, tend to attract money during times of economic or political uncertainty.

"Although the storm caused a lot of damage, it didn't appear to be the worst-case scenario," Mr. Heckman said, adding that Treasurys have swung on short-term developments in recent sessions.

Later this week, bond investors will get a fresh look at inflation, with the producer-price index expected to be released on Wednesday and the consumer-price index scheduled for Thursday.

While various measures of the U.S. economy have picked up this year, inflation readings have remained largely muted, adding to investors' view that the Federal Reserve will be unlikely to raise rates quickly.

That's helped keep yields in a narrow range, despite expectations at the start of the year that policy changes from the Trump administration would kick-start economic growth and inflation and in turn, sap demand for Treasurys. The yield on the 10-year note finished 2016 at 2.446%.

"We think the market will continue to trade in a tight range until we see changes on the inflationary front," Mr. Heckman said.

Write to Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

September 11, 2017 16:13 ET (20:13 GMT)