NEW YORK: US Treasuries yields declined on Thursday as a batch of disappointing economic reports revived worries about the US economy and prompted further questions whether the Federal Reserve will raise interest rates later this year.
An exit of bearish bond bets in advance of a government report on consumer prices in April and an economic speech from Fed Chair Janet Yellen on Friday further pushed a drop in yields, with the 30-year falling below 3 percent, analysts said.
Weaker-than-expected data on existing home sales, the manufacturing sector and US Mid-Atlantic business activity came a day after the central bank signaled a June rate hike is doubtful following an anemic first-quarter.
"There were fears about a sharp spring recovery, but the data haven't rebounded smartly," said Robert Tipp, chief investment strategist at Prudential Fixed Income in Newark, New Jersey.
Fed policy-makers at their April 28-29 meeting said they would like to see further economic improvement to decide on ending their near-zero interest rate policy stand, according to minutes released on Wednesday.
While most Wall Street economists forecast the Fed will raise rates by year-end, many of them said the Fed may postpone such a move until 2016 if more weak data surface.
Treasuries yields also declined on an emergence of month-end portfolio buying tied to an expected adjustment of a widely followed Treasuries market index that includes more longer-dated issues, analysts said.
On light trading volume, benchmark 10-year Treasuries were up 17/32 in price with a yield of 2.188 percent, down 6 basis points from Wednesday.
The 30-year bond was up 1-14/32 in price, yielding 2.976 percent, down 7.5 basis points.
Selling pressure on Treasuries from the domestic corporate bond sector also eased heading into a three-day US holiday weekend.
The US bond market will close at 2 p.m. (1800 GMT) on Friday, and stay shut on Monday for the US Memorial Day holiday.
More than $42 billion worth of investment-grade corporate bonds have been sold so far this week, putting May on pace as a record month for issuance, according to IFR, a unit of Thomson Reuters.
Less corporate supply likely bolstered interest in the $13 billion auction of 10-year Treasury Inflation Protected Securities (TIPS), analysts said.
Prior to the end of Friday's shortened session, traders will await for a likely muted April reading on the consumer price index, which economists forecast likely rose 0.1 percent.
Comments
Comments are closed.