BOND REPORT: Treasury Yields Edge Lower As Health-care Showdown Looms
March 24 2017 - 8:52AM
Dow Jones News
By Joseph Adinolfi, MarketWatch
Durable-goods survey data disappoint
Treasury yields were little-changed on Friday as President
Donald Trump headed for a showdown with recalcitrant congressional
Republicans who've balked at his proposal to repeal and replace
Obamacare.
The yield on the 10-year Treasury note was off about half a
basis point at 2.418%, while the yield on the two-year note rose by
the same amount to 1.261%. The yield on the 30-year bond was down
one basis point at 3.026%. Bond yields move inversely to
prices.
Congressional Republicans delayed a vote on the health-care bill
scheduled for Thursday night after the White House and House
Freedom Caucus failed to reach a compromise.
Trump delivered an ultimatum to congressional Republicans late
Thursday, saying they could either pass his bill as-is on Friday,
or he would leave Obamacare in place and move on to other
legislative priorities.
Earlier in the day, Republicans delayed a vote on their bill,
initially scheduled for Thursday evening, after Trump and the House
Freedom Caucus failed to reach a compromise.
Despite Trump's admonishments, it appears some in the freedom
caucus who believe the White House bill leaves too much of
Obamacare in place are still planning to vote against the bill. In
a Friday morning interview with CNBC, Rep. Mo Brooks, a Republican
of Alabama, called it "one of the worst bills" ever, adding "I
refuse to surrender."
Treasury yields shot higher after Trump's victory in the Nov. 8
election as investors hoped he would swiftly implement a
purportedly pro-business agenda, including corporate tax cuts,
deregulation and infrastructure spending.
But health-care reform, which many had believed would pass
relatively easily, given that the GOP holds majorities in the House
and Senate, is proving more challenging.
"Investors were probably thinking this was going to happen a
little quicker," said Charlie Ripley, assistant vice president of
capital markets and trading at Allianz Investment Management.
A Census Bureau survey of durable-goods orders showed orders for
core goods placed with domestic manufacturers declined in February,
dashing investors' hopes for a modest increase. Investors are
looking ahead to a report on manufacturing activity from Markit,
which is due out at 9:45 a.m. Eastern.
"Soft" data, a category that includes surveys like the
durable-goods indicator, have improved markedly since the election,
reflecting increased optimism about the pace of economic growth.
But, Ripley said, he's hoping to see "hard" data, like reports on
manufacturing activity and gross domestic product, will see a
commensurate improvement.
"There's definitely a lot of optimism in the market and we'd
like to see that soft data and the hard data converge at some
point," Ripley said.
(END) Dow Jones Newswires
March 24, 2017 09:37 ET (13:37 GMT)
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