U.S. Treasury Bonds Flat as Investors Digest Fed Comments
August 30 2016 - 5:06PM
Dow Jones News
By Heather Gillers
Government-bond prices in the U.S. remained relatively flat
Tuesday amid light trading as investors continued to digest remarks
by federal officials.
The yield on the benchmark 10-year Treasury note was 1.57%,
compared with 1.566% Monday. Bonds yields fall as prices rise.
"We've drifted around without a lot of direction," said Priya
Misra, head of global rates strategy at TD Securities in New York.
She said this Friday's expected payroll report will offer important
guidance on when the Federal Open Market Committee might raise
interest rates.
Hawkish comments last Friday by Fed officials fueled speculation
of a September rate increase, prompting a selloff. That was
followed by a rally as dropping prices attracted buyers. Prices
drifted down again late Monday night.
The market rallied again Tuesday morning after Federal Reserve
Vice Chairman Stanley Fischer adopted a more dovish tone about
whether the Fed will raise rates more than once this year.
"I don't think we know at the time we start whether it's one and
done or several," Mr. Fischer said in an interview. "It depends
entirely on what's happening in the economy."
At a conference in Jackson Hole, Wyo., Friday, Fed Chairwoman
Janet Yellen said the case for raising rates "has strengthened in
recent months." In an interview later that day, Mr. Fischer
interpreted the comments to mean that the Fed could raise interest
rates twice this year, including at its next policy meeting in
September.
By one measure, investors' expectations of a rate increase by
the FOMC in September are right where they were on Thursday, before
Ms. Yellen's speech and Mr. Fischer's comments. Federal-funds
futures, which are used to place bets on central-bank policy, show
investors and traders again believe there is a 24% chance the Fed
will raise rates next month, according to CME Group. That number
rose as high as 33% on Friday.
"The market is walking back the odds of a hike in September,"
said Aaron Kohli, an interest-rate strategist at BMO Capital
Markets.
Write to Heather Gillers at heather.gillers@wsj.com
(END) Dow Jones Newswires
August 30, 2016 17:51 ET (21:51 GMT)
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