Bond Report: U.S. government bond yields hold steady as market awaits a batch of data

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U.S. Treasury yields were little-changed on Thursday as fixed-income investors watched for a barrage of economic reports that could help guide sentiment for bonds, which have mostly been bought despite gains in stocks that ordinarily rise in step with yields for government paper.

How are Treasurys performing?

The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +0.83%  edged 0.7 basis point lower to 1.781, while the 2-year Treasury yield TMUBMUSD02Y, +1.31%  inched 0.4 basis point lower to 1.556%

The 30-year Treasury bond yield TMUBMUSD30Y, +0.78%, also known as the long bond, fell 1 basis point to 2.233%.

Bond prices rise as yields fall.

What drove the market?

Bond-market investors haven’t reacted substantially to the signing of the partial trade accord between the U.S. and China that was completed at the White House on Wednesday. The benchmark U.S. 10-year bond yield has hung below 1.8%, with some investors citing doubts about the next phases of trade talks and accommodative central-bank policy as cause for government debt drawing bids. Worries about other geopolitical events also loom.

The Wall Street Journal writes that the eight-part trade agreement, ending the 18-monthlong Sino-American clash, leaves in place U.S. tariffs on about $370 billion in Chinese goods, or about three-quarters of Chinese imports to the U.S.

Looking ahead, a number of U.S. data points will be digested by markets on Thursday. Those include jobless claims for the week ended Jan. 11, the Philadelphia Fed Business Outlook Survey, or Philly Fed, for January, retail sales for December, and a report on import and export prices for December, all due at 8:30 a.m. Eastern Time.

Following that parade of economic reports, debt investors may turn to the a reading on business inventories and a housing prices at 10 a.m., followed by a report on the state of the Fed’s balance sheet at 4:30 p.m.

Meanwhile, minutes from the European Central Bank’s minutes from the December meeting, was relatively upbeat on eurozone inflation, noting that there were “mild indications” that core inflation was rising. However, it was more subdued about the state of the overall economy, which it described as weak. “There were likely two main reasons why yields had not continued on an upward trajectory. First, the outlook remained less favourable than at the start of 2019 and there was still no breakthrough in the resolution of the two major risk factors currently facing the global economy, i.e. the imposition of tariffs and Brexit,” the account of the ECB meeting read.

The ECB meeting was the first headed by new chief Christine Lagarde.

What are strategists saying?

“Like I’ve said in the past, I wish the 10 year Treasury yield could speak to us and say what they’re thinking about the growth story because the yield just sits there and does nothing in light of this trade deal,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote in a Thursday research note.

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