Treasury Yields Tumble as Trump Says He Likes Low Interest Rates

  • Benchmark 10-year yield extends drop below critical 2.3% level
  • Geopolitical risks remain in focus with Tillerson in Russia

Treasuries rallied, with the benchmark 10-year yield tumbling to the lowest level of 2017, after President Trump said he likes the Federal Reserve’s low-interest-rate policy and is leaving open the possibility of renominating Chair Janet Yellen.

The 10-year U.S. yield fell as much as four basis points to as low as 2.257 percent, the lowest intraday level since Nov. 17. Thirty-year yields fell to 2.9 percent, just above the year-to-date low set in January.  

Treasuries have rallied for a fifth-straight week as investors seek havens from geopolitical risks throughout the world, including in North Korea and Syria. U.S. Secretary of State Rex Tillerson met Wednesday with Russian President Vladimir Putin about the Syrian conflict, while foreign journalists visiting North Korea have been told to prepare for a “big and important event” on Thursday, according to Reuters.

Moreover, Trump told the Wall Street Journal that the dollar “is getting too strong,” and that he “likes” and “respects” Yellen. The greenback plunged on the remarks. He said he’s undecided on if he would renominate her as Fed Chair. He also said he likes the central bank’s low-interest-rate policy.

  • The 2.3% yield 10Y level, which held for most of the year, seen as key by many strategists; Citi has said a sustained break of that would mean buying TY futures makes sense, targeting a move to 2%
  • Traders are “attempting to determine if we’re at an inflection point for the market that will be followed by either a return to or a break of the prevailing range,” BMO Capital Markets strategists Ian Lyngen and Aaron Kohli wrote in a note to clients
  • Wednesday’s 30-year auction drew a yield of 2.938 percent, with the bid-to-cover ratio of 2.23, the lowest since November
  • It’s a holiday-shortened week, with a recommended 2 p.m. close for U.S. bond markets on April 13 and a full close on April 14
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