Treasury Yields Touch 2017 Lows on Trump’s Dollar View

  • Gains leave 10-year note yield close to 50-day average
  • Trump says dollar, rallying since election, is ‘too strong’

Inside the Dollar's Weakest Day Since July 29th

Treasuries held most of the gains that pushed yields to the lowest levels since at least December, after President-elect Donald Trump’s comment that the dollar is already too strong sent the greenback plunging.

The benchmark 10-year yield fell seven basis points to 2.32 percent at 4:24 p.m. in New York, according to Bloomberg Bond Trader data, near its 50-day moving average, which it hasn’t closed below since September. It touched 2.3036 percent, the lowest since Nov. 30, with the Bloomberg Dollar Spot Index headed for its biggest decline since July. Treasuries led gains globally, with bonds advancing in a majority of the 25 developed markets tracked by Bloomberg.

  • Trump in a Wall Street Journal article said the dollar is already “too strong” 
    • Treasury yields and the dollar index have moved in tandem since his election
  • Treasury yield curve from five to 30 years steepens to about 111 basis points, highest in over a week; remains inside its range since mid-December
  • Treasuries gained in the late session as IG credit issuance from Bank of America and Morgan Stanley launch
    • Total issuance on the day at $20.75b with $18.75b from U.S. banks
  • In U.S. economic data, January Empire Manufacturing Index fell to 6.5, missing median forecast of 8.5; later this week, CPI, industrial production and housing starts
  • New York Fed President William Dudley said Tuesday that “inflation is simply not a problem” and he’s optimistic that the economic expansion will continue over the next few years; Governor Lael Brainard said fiscal stimulus could affect pace of hikes and reinvestment of Fed holdings
    • Other speakers this week include Kaplan, Kashkari, Yellen, Harker and Williams
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