Treasuries rally as dollar continues decline

Thursday, 31. January 2019 08:59

The intention expressed by policymakers from the Federal Reserve to be patient before any interest rate increases in the United States underpinned stocks on Thursday and continued to boost valuations of the country's sovereign debt securities, particularly for nearer maturities. The dollar remained on a mild downward slope after last night's dovish turn by the central bank, which expressed willingness to slow the runoff of the giant bond portfolio. Chair Jerome Powell insisted muted inflation readings justify the shift in stance, brushing off concern over instability or the potential for a downturn.

The US two-year note jumped, taking yields 1.6 basis points lower to 2.5% at 2:57 am ET. The ten-year was down one point at 2.672% after the benchmark went as low as 2.666%, the weakest reading since January 3. It compares to a slight decline to 3.03% for the 30-year bond. Corresponding futures advanced 0.03%, 0,04% and 0.09%, respectively.

In comparison, the German 10-year note yielded 0.169%, down 2.1 points for the day, after hitting a four-year low at 0.165%, and Bund futures grew 0.07%. The euro was 0.15% higher at $1.14989, following a rise to $1.15141, last seen on January 11. The greenback slipped 0.2% to ¥108.7205 in its sixth consecutive session in the red against the Japanese peer.

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