Treasuries rise as traders wait for Fed's rate decision

Tuesday, 17. September 2019 08:49

Prices of United States government debt advanced slightly on Tuesday early in the session, sending yields moderately lower. Stocks in China tumbled with downbeat macroeconomic data and the spike in oil futures after Saudi Arabia's production volume was halved in a missile or drone attack from an unknown location. The price surge in energy could revive inflation at a time when the world's central banks are inclined to interest rate cuts and bond purchases, increasing risks of a so-called overheating. The Federal Reserve starts a two-day meeting today, after which it is scheduled to issue a policy decision.

US sovereign yields fell sharply yesterday amid risk aversion, following last week's substantial gains. The curve remained inverted in the widely watched section between three months and ten years, where the three-month bill rate dropped 1.7 basis points at 2:45 am ET to 1.972%. The benchmark spread between the ten-year and two-year Treasuries is modestly positive after recovering from an inversion, which could be a precursor to a recession.

The two-year yield was down 0.8 points at 1.758% compared to an equivalent retreat to 1.839% for the securities maturing in a decade. The yield on the 30-year US bonds slipped by half a point to 2.314%. Equivalent futures gained 0.01%, 0.04% and 0.05%, respectively.

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