Treasuries rally further on Powell's debt concerns

Friday, 11. January 2019 17:08

Prices of United States sovereign debt securities advanced significantly on Friday, underpinned by a moderate selling pressure in the stock markets. Investors, already concerned about the prospects of the world economy and the path of trade negotiations between the United States and China, opted for the relative safety of Treasuries after yesterday's comment by Federal Reserve Chair Jerome Powell that the rise in domestic debt is a serious issue. He has also vowed to take the central bank's balance sheet down "to a more normal level" but "nowhere near where it was before."

Of note, US consumer price growth slowed to 1.9% on an annual scale last month from 2.2% and the index slipped 0.1% from November, but core inflation held at 2.2% and 0.2%, respectively.

The two-year note yield fell 3.7 basis points to 2.541% at 11:04 am ET. The five-year notes yielded 2.519% or 4.9 points less for the day. The ten-year benchmark dropped 5.5 points to 2.692%, compared to the decline of 4.3 points for the 30-year bonds. Prices of equivalent futures climbed 0.07%, 0.19%, 0.3% and 0.6%, respectively. Bond prices move inversely to yields.

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