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U.S. government debt yieldsslipped on Thursday as a fresh wave of buying pressured the 10-year Treasury note rate to under 3 percent.
Bond investors will also scrutinize a fresh group of economic data, with both jobless claims and durable goods reports out Thursday morning.
The yield on the benchmark 10-year Treasury note was lower at around 2.99 percent at 7:45 a.m. ET, while the yield on the 30-year Treasury bond was lower at 3.177 percent. Bond yields move inversely to prices.
Markets around the globe have been keeping a close eye on the U.S. bond market as rising Treasury yields put investors on edge. On Tuesday, the yield on the 10-year Treasury note topped 3 percent, the first time it’s done this in more than four years, and extended gains on Wednesday.
With yields on the apparent rise, market participants are wondering what this will mean for the global economy with many expecting this to mean higher interest rates from central banks.
On Thursday however, the 10-year note reversed gains and financial stock markets were switching their attention to earnings and data releases. At 8:30 a.m. ET, jobless claims, durable goods and advance economic indicators report are all due, followed by housing vacancies at 10 a.m. ET and the Kansas City Fed Manufacturing Index at 11 a.m. ET.
“We’ve not only heard of overnight dip-buying from real money in 10s and 30s, but the Ministry of Finance data confirms that Japanese buying is back,” wrote Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets. “The region purchased overseas notes and bonds (including
Treasuries, EGBs, etc.) totaling $8.7 billion versus sales in the prior week of $7.4 billion. This represents the second largest weekly buying since July.”
The U.S. Treasury meanwhile is set to auction $29 billion in seven-year notes.
On the central banking front, while no members of the U.S. Federal Reserve are set to deliver remarks, news will be coming out of Europe on Thursday. In Germany, the European Central Bank (ECB) is scheduled to host its next Governing Council meeting, which will see a rate decision before the U.S. open.
At 8:30 a.m. ET, ECB President Mario Draghi will then give a press conference where he could weigh in on a whole host of topics, such as monetary policy, trade, the euro and the economic wellbeing of the eurozone. Market participants are expecting the central bank to keep rates on hold at this month’s meeting.
In politics, French President Emmanuel Macron called upon the U.S. on Wednesday to engage more with the rest of the world and tackle nationalism. The leader went onto discuss the importance of fighting climate change and explaining why the nuclear deal with Iran must remain intact until a replacement is fulfilled.