US Treasury prices fell on Thursday as investors waited for a vote by lawmakers on a bill to replace the Obamacare healthcare law, which is seen as a gauge of the Trump administration's ability to implement near-term goals. President Donald Trump made a final push on Thursday to win over skeptical members of his own Republican Party to begin dismantling Obamacare in the House of Representatives or risk failure on one of his top legislative priorities.
Delays in passing domestic legislation, including healthcare, are seen as likely to push back any new fiscal stimulus, which investors had anticipated would boost growth and possibly lead to faster than previously expected interest rate increases.
"There's a lot riding on Republicans to get it passed, and if they can't get it passed, the market is going to assume that it's going to be very difficult to get anything else of Trump's agenda through," said Mary Ann Hurley, vice president in fixed income trading at D.A. Davidson in Seattle.
Concerns about delays in fiscal reform helped send stocks lower this week while increasing demand for safe-haven bonds.
Benchmark 10-year notes were last down 7/32 in price to yield 2.42 percent.
The 10-year yields fell to 2.375 percent on Wednesday, their lowest since February 28. They are down from a three-month high of 2.63 percent on March 14. Investors have lowered expectations of a more aggressive Federal Reserve as doubts about the pace of change in Washington increase. The US central bank raised interest rates last week as expected but took a more dovish tone on future hikes than some investors had anticipated.
Investors who held back from taking new positions before the Fed meeting have also returned to the market since the rate hike, helping bonds rally. "Money was sidelined waiting for the Fed to hike rates," said Dan Mulholland, head of Treasuries trading at Credit Agricole in New York. "Then once they did, we saw a bit of money come into the market."
Fed Chair Janet Yellen did not address monetary policy or the economic outlook in prepared remarks for a childhood education conference in Washington on Thursday. Fed speakers on Friday include St. Louis Fed President James Bullard, San Francisco Fed President John Williams, Chicago Fed President Charles Evans and New York Fed President William Dudley. Durable goods data and manufacturing data on Friday will also be in focus. The Treasury Department sold $11 billion in 10-year Treasury Inflation-Protected Securities on Thursday at a high yield of 0.466 percent.
Comments
Comments are closed.