US Treasury Bonds Display Mixed Performance
(New York = Yonhap Infomax) – The US Treasury bonds have exhibited a mixed trend recently. Following the downgrade of the US national credit rating by international rating agency Fitch, the US ADP private employment index for July displayed solid growth, leading to some selling of the bonds.
According to Yonhap Infomax (screen no. 6532), as of 8:55 am Eastern Time on the 2nd, the 10-year government bond yield in the New York market was recorded at 4.054%, a gain of 1.20 basis points from 3:00 pm on the previous trading day.
The two-year yield, which reflects the impact of monetary policy, stood at 4.887%, marking a decrease of 3.30 basis points from the previous day.
Meanwhile, the 30-year government bond yield reached 4.123%, rising by 2.00 basis points from 3:00 am.
The spread between the 10-year and 2-year bonds widened from -87.8 basis points to -83.3 basis points.
It is worth noting that Treasury yields and prices have been moving in opposite directions.
Market participants are closely monitoring news regarding the US credit rating downgrade and employment-related indicators.
Fitch downgraded the US national credit rating from ‘AAA’ to ‘AA+’ after the close of the US stock market on the previous day, which caused turmoil in the financial market.
However, there was no sudden surge of buying or selling of US Treasury bonds this morning.
In fact, some purchases were observed, indicating that investors still consider US Treasury bonds as safe assets, even in times of credit rating downgrades.
Despite the credit rating downgrade, the US economy has displayed solid performance, particularly in terms of employment indicators.
This has further boosted the sale of long-dated bonds.
The labor market indicators have consistently shown positive trends.
According to the ADP National Employment Report, employment in the private sector increased by 324,000 in July, surpassing the Wall Street Journal (WSJ) consensus estimate of 175,000.
Wage growth in July rose by 6.2% year on year, a slight moderation compared to the previous month’s 6.4% increase.
As of midday, the 10-year and 30-year Treasury yields rose to 4.08% and 4.15%, respectively.
Meanwhile, the two-year yield initially fell to 4.84% on the same day but gradually recovered to the 4.90% range.
Market participants are eagerly awaiting the release of the non-farm payrolls report before the weekend.
In light of the current situation, experts on Wall Street argue that downgrading sovereign credit ratings is not appropriate when the economy is performing well.
As a result, panic selling in the bond market has not been clearly observed.
Gennady Goldberg, head of US interest rate strategy at TD Securities, mentioned that during the credit rating downgrade in August 2011, investors flocked to safe-haven US Treasury bonds, resulting in a surge in bond prices. He also stated that significant action on the US credit rating is not expected in the near term. However, he cautioned that the bond ratings of some government-guaranteed companies (GSEs) may face downgrades, which could increase volatility.
syjung@yna.co.kr
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(This article was submitted at 22:22, two hours prior to the Infomax financial information terminal.)
(New York = Yonhap Infomax) Reporter Jeong Seon-young = US Treasury bonds showed a mixed trend. 10 Years of Treasury Product Information Tick Chart Association
Following a downgrade of the US national credit rating by international credit rating agency Fitch, the US ADP private employment index came out solid in July, supporting some bond selling.
According to Yonhap Infomax (screen no. 6532), as of 8:55 am on the 2nd (hereinafter referred to as Eastern Time), the 10-year government bond yield in the New York bond market was trading at 4.054%, to up 1.20bp from 3:00 on the previous trading day.
The two-year yield, which is sensitive to monetary policy, was 4.887%, down 3.30bp from 3:00 the previous day.
The yield on 30-year government bonds stood at 4.123%, up 2.00bp from 3:00 am on the battlefield.
The spread between the 10-year and 2-year bonds widened from -87.8bp on the previous trading day to -83.3bp.
Treasury yields and prices are moving in different directions.
Market participants are watching the outcome of the news about the US credit rating downgrade and employment-related indicators.
Fitch downgraded the US national credit rating from ‘AAA’ to ‘AA+’ after the US stock market closed the previous day, causing turmoil in the financial market.
However, the buying and selling of US Treasury bonds did not happen suddenly this morning.
Some purchases are also supported, reviving the fact that when the US sovereign credit rating was downgraded in the past, US Treasury bonds were bought in favor of safe assets.
Despite the downgrade in the US credit rating, the US economy showed a solid trend, including robust employment indicators.
This boosts the sale of some long-dated bonds.
Labor market indicators continued to show solid trends.
According to the ADP National Employment Report, employment in the private sector increased by 324,000 in July from the previous month.
This was much higher than the 175,000 expected by experts compiled by the Wall Street Journal (WSJ).
Wage growth in July rose 6.2% year on year, slightly moderated from the previous month’s 6.4% increase.
As of this morning, the 10-year and 30-year US Treasury yields rose to 4.08% and 4.15%, respectively, during midday.
However, the two-year yield fell to 4.84% during the one-day period and then gradually recovered to the 4.90% range.
Market participants are waiting for the non-farm payrolls report to be released before this weekend.
In this plot of downgrading credit ratings, Wall Street experts show the situation that downgrading sovereign credit ratings is not appropriate in a situation where the economy is doing well.
As a result, the panic flow in the bond market did not appear clear.
Gennady Goldberg, head of US interest rate strategy at TD Securities, said, “In August 2011, the S&P credit rating downgrade prompted investors to reflexively flock to safe-haven US Treasury bonds, leading to a surge in the bond prices of the government. note that we do not expect significant action on the US credit rating in the near term,” he said.
However, he said, “the bond ratings of some government-guaranteed companies (GSEs) may also be downgraded, which could increase volatility.”
syjung@yna.co.kr
(end)
This article was submitted at 22:22, 2 hours earlier on the Infomax financial information terminal.
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