Treasuries: Ten-year yields at 2-week lows after housing market data

Applied Energetics

30/01/2024 14:37

By David Randall
       NEW YORK, Jan 30 (Reuters) - Benchmark U.S. 10-year
Treasury yields fell to two week lows Tuesday following a weaker
than expected reading of U.S. home prices as investors continued
to wait for Wednesday's Federal Reserve decision on interest
rates. 
    The decline in yields comes on the heels of Monday's
announcement by the Treasury Department that it will not need to
borrow as much as it had forecasted in October, alleviating some
concern among investors about oversupply. 
    Yields closed below their 200-day moving average Monday,
which historically has signaled another 10 to 12 basis point
drop over the next few trading sessions, noted Ian Lyngen, head
of U.S. rates strategy at BMO Capital Markets. 
    "It's easy to envision a breakout that brings 10-year yields
comfortably below 4.0%," he said. 
    Overall, the Case-Shiller Home Price Index rose 5.40% on the
year that ended in November and gained 0.15% on a seasonally
adjusted monthly basis, slightly below expectations of a 5.80%
annual gain and a 0.5% monthly advance. 
    Investors are waiting for Wednesday's Federal Reserve
interest rate policy announcement. While markets have priced in
a near-certainty that the Fed will keep benchmark rates at their
current level, Fed Chair Jerome Powell's press conference will
likely give clues as to the number of interest rate cuts the
central bank expects to see this year. 
    Markets have priced in the first 25 basis cut in May, later
than a cut at the March meeting that was expected at the start
of the year. 
        The yield on the 30-year Treasury bond  US30YT=RR  was
down 5.2 basis points at 4.283%. 
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes  US2US10=RR , seen as an indicator of economic
expectations, was at -25.7 basis points. 
    The two-year  US2YT=RR  U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down 1.4
basis points at 4.308%. 
        
  

 (Reporting by David Randall; Editing by Emelia
Sithole-Matarise)
 ((David.Randall@thomsonreuters.com; 646-223-6607; Reuters
Messaging: david.randall.thomsonreuters.com@reuters.net))