TREASURIES-U.S. bond yields bounce back from one-month lows

April 6, 2016 Yahoo Finance

By Dion Rabouin

NEW YORK, April 6 (Reuters) – U.S. Treasury yields rose from one-month lows on Wednesday, led by longer-dated bonds as a rebound in oil and stock prices prompted investors to sell safe-haven government debt.

The bounce in yields was also largely a technical correction, analysts said, with the 10-year yield well below long-term moving averages and having recently posted its steepest quarterly drop since the March-June quarter of 2012, according to Reuters data.

“What we’re looking at is … a reversal in risk assets, i.e., there was a little bit of a bounce,” said CRT Capital senior government bond strategist Ian Lyngen in Stamford, Connecticut.

“We were making the argument that the price action (in bonds) had simply gotten overextended … and we were a bit overdue for a consolidation/reversal.”

Treasury yields reached session highs following a burst of selling in the futures market in advance of the Federal Reserve’s releasing the record on its March policy meeting.

But yields pared gains slightly after the minutes were released as they suggested a less dovish outlook for the Fed than the one signaled by Chair Janet Yellen in recent weeks.

The minutes showed that a “range of views” were discussed, including hiking rates at the central bank’s upcoming meeting on April 27-28. However, several bankers said elevated risks faced by the U.S. economy meant raising in April “would signal a sense of urgency they did not think appropriate,” according to the minutes.

“We saw yields firm up initially after the release, which was to be expected given the slightly hawkish slant,” said Scott Smith, senior market analyst at Cambridge Global Payments in Toronto.

“What we’ve seen in the last couple weeks since the decision itself and the speech from Yellen in New York is yields in the U.S. grind lower just on that cautious outlook or pessimistic outlook towards interest rates, given the uncertainty around the international climate.”

Yellen last week expressed concerns about the threat of weak global growth on the U.S. economy, saying the Fed should look to “cautiously” raise rates.

The risk-on session pushed stock market up globally, with a gauge of global equity markets rising 0.8 percent. On Wall Street, the S&P 500 rose nearly 1 percent.

U.S. crude futures jumped 5 percent, with world benchmark Brent crude up 4.8 percent.

Yields on 10-year Treasuries were last down 9/32 in price to yield 1.760 percent

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