Bond Report: Treasury yields trade lower ahead of U.S. housing and industrial data

This post was originally published on this site

U.S. Treasury yields inched lower on Tuesday as investors looked forward to economic data which will offer snapshots of the trade-battered U.S. manufacturing sector and also the strengthening housing market.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, -0.75%  slipped 3.6 basis points to 1.856%. The 2-year note yield TMUBMUSD02Y, +0.26%   was off 1.8 basis points to 1.622%, while the 30-year bond yield TMUBMUSD30Y, -0.58%   edged down 1.9 basis points to 2.271%.

What’s driving Treasurys?

U.S. housing starts and building permits numbers for November are due at 8:30 a.m. ET, followed by November’s industrial production reading at 9:15 a.m. ET. Last, the U.S. Labor Department’s job openings and labor turnover survey for October will be released at 10 a.m.

Several Federal Reserve officials will speak on Tuesday, kicked off by Dallas Fed President Robert Kaplan at 8 a.m. ET, New York Fed President John Williams and Boston Fed President Eric Rosengren will also talk later in the day.

The modest bullish tilt in bond-market action came as U.K. Prime Minister Boris Johnson said he would look to pass a law that would force Britain to come up with a trade deal in the next few months or crash out of the European Union on the World Trade Organization’s terms. Johnson’s Conservative party won an overwhelming majority in Parliament, which some have understood as giving Johnson a broad mandate to carry out Brexit.

His announcement helped spur a rally in U.K. government paper, or gilts. The British 10-year bond yield TMBMKGB-10Y, -5.99%   slumped 6 basis points to 0.765%.

What did market participants’ say?

“UK assets were reminded that the UK election has given us certainty that Brexit will happen, but the timing and method of Brexit is still uncertain,” said analysts at NatWest Markets, in a Tuesday note. “