Treasuries Decline With Global Bonds as ECB to Slow Asset Buying

  • Benchmark U.S. 10-year yield climbs the most in a week
  • Yield curves steepen as euro-area deflation risk seen fading

Treasuries declined, with benchmark 10-year yields climbing the most in a week, after the European Central Bank said it would slow its pace of monthly asset purchases starting in April.

The U.S. 10-year yield rose six basis points to 2.4 percent at 4:15 p.m. in New York, according to Bloomberg Bond Trader data. Debt from Portugal and Italy led declines in developed markets after the ECB expanded its quantitative-easing program to exceed 2.2 trillion euros ($2.4 trillion) by the end of 2017, extending the program from April at a slower speed of 60 billion euros a month, from 80 billion euros currently.

  • U.S. yield curve between five and 30 years steepened to a three-week high as longest-maturity bonds led declines
    • ECB President Mario Draghi said the risk of deflation has largely disappeared and the bank sees euro-area inflation at 1.3 percent last year, up from 1.2 percent
  • The FOMC meets Dec. 13-14 and the market-implied probability remains close to 100 percent that the fed funds target will rise 25 basis points to a range of 0.5 percent to 0.75 percent
    • Rate increase appears “close to a done deal”; still expecting two hikes in 2017, JPMorgan economists wrote in a Dec. 7 note
  • In U.S. economic data, fewer Americans filed applications for unemployment benefits last week, with initial jobless claims declining by 10,000 to 258,000 in the week ended Dec. 3
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