Treasuries advance in runup to Fed's decision

Wednesday, 18. September 2019 11:54

Prices of United States government debt rose on Wednesday as traders weighed geopolitical risks including the escalation of the crisis in the Persian Gulf, as Iran threatened to retaliate widely to any attack by the Pentagon or its allies. The gain in bonds equals a drop in yields, where the loss in the near end of the curve was slight, while the benchmark 10-year and 30-year measures tumbled more than three basis points each.

Markets were bracing for a likely reduction today in the Federal Reserve's interest rates but the excitement has waned since the short but historic spike in crude after a mysterious attack on Saudi Arabia's core oil facilities. The two-year US yield retreated to 1.721% at 5:42 am CET compared to the Fed's current target range at 2% to 2.25%, translating to expectations of further policy easing. The other two main gauges tumbled to 1.772% and 2.236%, respectively.

Equivalent futures advanced 0.03%, 0.16% and 0.35%. Of note, the central bank was preparing for a second repurchase operation after yesterday it provided the first liquidity injection since the financial crisis.

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