US Treasury yields fell on Thursday, with some short- and medium-term issues hitting their lowest levels in more than three weeks, after the Bank of England cut interest rates for the first time since 2009 and said it would buy government bonds.
The BoE cut rates 25 basis points to 0.25 percent on Thursday and said it would buy 60 billion pounds of government debt to ease the blow from Britain's June 23 vote to leave the European Union. The Bank said most BoE policymakers expected to cut the rate even closer to zero later this year. The move pushed yields on 10-year UK government bonds, or Gilts, to a record low of 0.639 percent, which further increased the attractiveness of US yields by comparison.
Yields on Treasuries maturing in two, three and five years hit their lowest levels in more than three weeks of 0.643 percent, 0.745 percent and 1.017 percent, respectively. Yields move inversely to prices. "You have investors looking at US assets not only because they're higher-yielding but they have a more stable and rising currency," said Jim Vogel, interest rates strategist at FTN Financial in Memphis. The euro hit a six-day low on Thursday, while the pound hit an eight-day low.
Benchmark 10-year US yields hit their lowest level in three days at 1.484 percent, while 30-year Treasuries prices rose more than a full point, their yields also hitting a three-day low of 2.233 percent. Low and negative yields on government bonds outside of the United States have helped underpin demand for US Treasuries, analysts said. The fall in US yields may have been more dramatic if investors were not anticipating Friday's US July jobs report, said John Briggs, US rates strategist at RBS in Stamford, Connecticut. Economists polled by Reuters expect US employers to have added 180,000 jobs, compared with 287,000 in June.
Some analysts said the data could impact traders' expectations about the timing of the next Federal Reserve interest rate increase. Federal funds futures on Thursday implied traders saw only a 33 percent chance of a rate hike from the US central bank this year, according to data from CME Group's FedWatch program.