Yield on 10-Year Treasury Note Closes at Lowest Level Since Election

A two-month rally in U.S. government bonds picked up fresh momentum Thursday, sending the yield on the 10-year note to a new postelection low.

The yield on the benchmark 10-year Treasury note settled at 2.061%, compared with 2.108% Wednesday. It was the lowest close since Nov. 8, Election Day, when it settled at 1.867%.

Yields fall when bond prices rise.

One catalyst for Thursday's rally, analysts and traders said, were signs that the European Central Bank's could maintain its current stimulus program longer than some investors had anticipated.

The ECB left all of its key interest rates unchanged at the conclusion of its latest policy meeting Thursday and said it would continue to buy EUR60 billion ($71.5 billion) of bonds a month through at least December. Officials also lowered their inflation forecast for the eurozone, even as they raised their growth outlook.

The moves suggested officials remain hesitant to withdraw stimulus that has curtailed supply of European government debt and played a part in dragging down bond yields globally.

Meanwhile, investors were paying close attention to political developments in Washington, a powerful hurricane approaching the Florida coast, and continued geopolitical tensions related to North Korea's nuclear program.

All of those factors have provoked anxiety among investors, boosting assets considered safe stores of value. Treasurys have also been supported by a stretch of soft inflation data, which has raised questions about whether the Federal Reserve might slow down the pace of its interest-rate increases.

"Moderate growth, no inflation, compounded by a lot of political uncertainty in Washington as well as geopolitical risks along various points on the globe -- this is all lining up today to give a nice bid to the Treasurys market," said Gary Pollack, head of fixed-income trading at Deutsche Bank AG's private wealth-management unit.

The 10-year yield settled at 2.446% at the end of last year. Since then, however, hopes that the Trump Administration could jumpstart economic growth and inflation by cutting taxes and regulations have faded, leaving investors wondering whether lawmakers can keep the government open and avoid a default on government debt.

--Ira Iosebashvili contributed to this article.

Write to Ira Iosebashvili at ira.iosebashvili@wsj.com

(END) Dow Jones Newswires

September 07, 2017 16:20 ET (20:20 GMT)