November 19, 2018 / 7:35 PM / 7 months ago

TREASURIES-Yields fall as tumbling stocks prompt safety buying

 (Recasts with yield fall, adds Fed's Williams' comments,
updates prices)
    * Falling stocks boost demand for Treasuries
    * NY Fed's Williams affirms further gradual rate hikes
    * Bond market closed Thursday for U.S. Thanksgiving holiday

    By Karen Brettell
    NEW YORK, Nov 19 (Reuters) - U.S. Treasury yields fell to
six-week lows on Monday as stocks fell, boosting demand for
low-risk U.S. government debt.
    Major stock indexes slid 2 percent as a slump in Apple
         shares battered the technology sector while conflicting
signals over the state of play between the United States and
China on their trade dispute kept investors on edge.     
    Benchmark 10-year notes             gained 6/32 in price to
yield 3.054 percent, the lowest since Oct. 3 and down from 3.074
percent on Friday.
    "The yields are lower today because of the stock market,"
said Lou Brien, a market strategist at DRW Trading in Chicago.
    Comments by New York Fed President John Williams on Monday
that the U.S. central bank is pushing ahead with gradual
rate-hike plans next month as it marches toward a more normal
policy stance may have added pressure to stocks.             
    Some investors questioned whether the Fed will be able to
continue raising rates, possibly harming economic growth.
    Williams' comments "probably helped push the stocks down to
a new leg because the comments by Clarida last week, although
hardly definitive, were adding a little bit more uncertainty to
the path of policy," Brien said.
    Richard Clarida, the Fed's newly appointed vice chair, said
on Friday that U.S. interest rates are nearing Fed estimates of
a neutral rate, which "makes sense."             
    "The market's interpretations of those comments were very
dovish," said Thomas Simons, a money market economist at
Jefferies in New York.    
    Fed Chairman Jerome Powell said last Wednesday that a
"really strong" U.S. economy is likely to continue growing, but
softness in housing and high levels of corporate debt have
caught the Federal Reserve's eye.             
    The bond market will be closed on Thursday for the
Thanksgiving holiday, and will close early on Friday.

 (Editing by Jeffrey Benkoe)
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