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TREASURIES-Long-dated yields sink to one-month low on Trump uncertainty
March 27, 2017 / 6:51 PM / 8 months ago

TREASURIES-Long-dated yields sink to one-month low on Trump uncertainty

    * Trump's healthcare setback weighs on Treasury yields
    * U.S. two-year note yields fall to one-month low as well
    * U.S. two-year note auction posts decent results

 (Adds comments, details of U.S. 2-year note auction, updates
    By Gertrude Chavez-Dreyfuss
    NEW YORK, March 27 (Reuters) - U.S. long-dated Treasury
yields dropped to one-month lows on Monday, weighed down by
growing doubts about the Trump administration's ability to
deliver on its campaign promise to bolster the economy.
    President Donald Trump suffered a major political setback on
Friday when fellow Republicans pulled their healthcare plan
after years of promising to abolish former President Barack
Obama's 2010 health law.
    "The recent hiccup on the policy front casts serious doubt
on the administration's ability to push forward its ambitious 
policy agenda," said Bruno Braizinha, interest rates strategist
at Societe Generale in New York.
    Yields, which move inversely to prices, had soared following
Trump's election as President last November on the expectation
of more stimulus that could boost inflation and prompt the
Federal Reserve to raise interest rates at a faster pace. 
    But since the Fed raised rates a few weeks ago and stuck to
its pace of three rate hikes this year, yields have fallen. U.S.
10-year note yields have declined by a quarter of a percentage
point, while that of 30-year bonds have dropped 20 basis points.
    Investors now feared that the healthcare bill's defeat
augured badly for tax reform.
    House Ways and Means Committee Chairman Kevin Brady said his
committee had been working on tax reform parallel with the
failed healthcare reform push. Brady said the committee plans to
move on the tax bill in the spring.             
    "The reality is that tax reforms are going to take longer
than people expected and that will cause some market
volatility," said James Athey, investment manager, at Aberdeen
Asset Management in London.
    In late trading, benchmark 10-year note price            
gained 8/32 to yield 2.367 percent, down from Friday's 2.4
percent. Yields earlier fell to 2.348 percent, their weakest
level in one month.
    U.S. 30-year bond prices rose 15/32            , yielding
2.976 percent. Earlier, yields slid to 2.96 percent, their
lowest since Feb. 28.
    A decent $26 billion U.S. two-year note auction pushed their
yields above the lows. U.S. two-year note yields were at 1.252
           percent in the afternoon session, off a one-month
trough of 1.228 percent hit earlier on Monday. 
    The U.S. note priced at 1.261 percent at the auction, lower
than the expected yield at the bid deadline, and higher than
February's 1.230 percent award rate.
    Bids totaled $70.9 billion for a 2.73 cover, just below the
strong 2.82 last month. Indirect bidders, which consist of
foreign central banks, took 53.6 percent versus 49.8 percent
previously, and well above the 41.4 percent average.

 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu
Nomiyama and Grant McCool)

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