Treasuries Finish Choppy Trading Session Modestly Lower

Trading 09 jan 2019 Donner votre avis

After recovering from an initial move to the downside, treasuries showed a lack of direction over the course of the trading session on Wednesday.

Bond prices spent much of the day bouncing back and forth across the unchanged line before closing modestly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.2 basis points to 2.728 percent.

With the slight uptick on the day, the ten-year yield continued to rebound from the more than eleven-month closing low set last Thursday.

Treasuries initially came under pressure amid optimism about trade talks between the U.S. and China after a meeting between U.S. and Chinese officials was extended to a third day.

Officials have not made public comments about the outcome of the talks, although traders remain hopeful the U.S. and China will reach a long-term trade agreement before a March 1st deadline.

Selling pressure waned shortly after the open, however, as traders looked ahead to the release of the minutes of the latest Federal Reserve meeting.

The minutes released this afternoon confirmed Federal Reserve Chairman Jerome Powell's recent remarks suggesting the central bank will take a patient approach to further interest rate increases.

Participants saw the appropriate extent and timing of future rate hikes as less clear than earlier, the minutes of the Fed's December meeting said.

The Fed decided to raise rates by a quarter point at the meeting, but the minutes suggest volatility in financial markets and increased concerns about global economic growth have clouded the outlook for rates.

"Against this backdrop, many participants expressed the view that, especially in an environment of muted inflation pressures, the Committee could afford to be patient about further policy firming," the minutes said.

A number of participants noted it was important for the FOMC to assess the impact of increasingly pronounced risks and the effects of past rate hikes before making further changes to the stance of monetary policy.

The patient approach espoused by the minutes is similar to remarks Powell made during a joint discussion with former Fed Chairs Janet Yellen and Ben Bernanke last Friday.

Remarks by Powell at the Economic Club of Washington are likely to attract attention on Thursday along with a report on weekly jobless claims.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of $16 billion worth of thirty-year bonds.


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