US Treasury debt was narrowly mixed on Monday as investors proved reluctant to make any major bets ahead of key events like a speech from the Fed chairman and the crucial September jobs report.
Underlying a four-day sell-off in bonds that lifted benchmark yields a quarter percentage point were worries that better economic performance could allow the Federal Reserve to continue raising interest rates for some time to come.
But technical issues were also at work, traders said, and as benchmark yields marched past a chart barrier of 4.21 percent the selling momentum seemed to wane.
Analysts said investors were unlikely to make any sharp moves ahead of Friday's employment report for September, which as always could drastically alter the outlook for growth and monetary policy going forward.
"We've experienced a significant decline in the market over the past number of days and I don't think people are going to be willing to commit to buy it ahead of the payrolls report," said Mary Ann Hurley, vice president of fixed-income trading at D.A. Davidson & Co in Seattle, Washington.
Also on tap is a speech from Fed chief Alan Greenspan on Tuesday. While he is not expected to address the economy directly, any commentary that even remotely touches upon the outlook for interest rates is likely to garner much attention. Factory orders shrank 0.1 percent in August but that was mostly due to a sharp drop in demand for civilian aircraft, while the prior month's growth rate was revised higher.
"Volumes are still strong enough to generate a few new factory jobs amid robust productivity gains," said Steven Wood, chief economist at Insight Economics. "Moreover, capital spending appears to be on track for another solid contribution to third quarter GDP."
There was the rub for bond bulls, who were still clinging to hopes that a raft of soft economic news could convince the Fed that a "neutral" level for interest rates should be lower in this unusual recovery than in earlier business cycles.
Comments
Comments are closed.