Treasuries Extend Recent Move To The Downside

Trading 13 fév 2019 Donner votre avis

Treasuries moved to the downside over the course of the trading day on Wednesday, extending the pullback seen over the two previous sessions.

Bond prices regained some ground after an early decline but still ended the day firmly negative. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.4 basis points to 2.708 percent.

Continued optimism about avoiding another government shutdown has reduced the appeal of safe havens like bonds, as President Donald Trump said he was "not happy" with a tentative deal reached by lawmakers but did not specifically reject the proposal.

The agreement includes far less money for physical barriers on the border than Trump has demanded, although political observers have suggested the president will likely want to avoid another damaging shutdown.

Trump has argued Democrats will be to blame for another shutdown, although the public may disagree as his controversial border wall remains the key sticking point in negotiations.

Traders also continued to express optimism about U.S.-China trade talks after Trump indicated he is willing to delay raising tariffs on Chinese goods if the two sides are close to a deal.

A report from the South China Morning Post said Chinese President Xi Jinping is scheduled to meet U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin during this week's talks in Beijing.

The meeting with Xi as well as a banquet for the U.S. delegation would be a sign of goodwill to cement a trade deal between the world's two biggest economies, the SCMP said.

On the U.S. economic front, the Labor Department released a report showing consumer prices were unchanged for the third straight month in January.

The Labor Department said its consumer price index was unchanged in January, matching the revised reading for December. Economists had expected consumer prices to inch up by 0.1 percent.

Excluding food and energy prices, core consumer prices rose by 0.2 percent for the fifth consecutive month. The uptick in core prices matched economist estimates.

The Labor Department said the annual rate of consume price growth slowed to 1.6 percent in January from 1.9 percent in December, showing the slowest rate of growth since June of 2017.

Meanwhile, the report said the annual rate of core consumer price growth was unchanged from the two previous months at 2.2 percent.

"Overall, these data support our baseline view of a well-behaved inflationary environment that provides the Fed room to pause before raising rates again," said Gregory Daco, Chief U.S. Economist at Oxford Economics.

He added, "We look for the Fed to pause throughout the first half of the year to assess the economic landscape before likely raising rates again in Q3."

Trading on Thursday is likely to be impacted by reaction to closely watched reports on retail sales and producer price inflation.


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