Treasuries drop as Wall Street looks to rebound

Thursday, 01. August 2019 12:09

Prices of United States government debt weakened on Thursday and yields jumped following the first reduction in interest rates in more than a decade. The Federal Reserve spooked stock traders and indexes dropped yesterday in late trade as Chair Jerome Powell wouldn't commit to lowering borrowing costs further. In the meantime, equities recovered in the premarket and yields for mid- to long-term maturities recovered most of the initial drop while the two-year gauge remained near the two-month high it reached in a spike. Investors are bracing for a policy update by the Bank of England due today and the responses from the Eurozone and Japan as rate-setters could opt to support their economies to rival peers, which has potentially devastating implications.

The two-year US yield was 1.6 basis points up at 6:04 am ET at 1.886%. The ten-year rate was 3.2 higher at 2.047% compared to the two-point rise to 2.547% in the yield on 30-year bonds. Corresponding futures slipped 0.03%, 0.21% and 0.28%, respectively.

Of note, Germany's ten-year benchmark advanced 1.1 points to a negative 0.427% against a retreat of 0.08% in equivalent Bund futures price. The yield on the United Kingdom's sovereign 10-year gilt was nearly flat at 0.609% as the country's debt securities pared losses for the day.

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