Warning: file_exists(): open_basedir restriction in effect. File(C:\zpanel\hostdata\zadmin\public_html\forexbr_com_br/wp-content/cache/supercache/www.forexbr.com.br/2020/03/18/bond-report-treasury-yields-slide-as-surge-in-jobless-claims-point-to-slowing-u-s-economic-growth/meta-wp-cache-74dc0298d652dafd4ae70fb7c047e0ee.php) is not within the allowed path(s): (c:/zpanel/hostdata/zadmin/public_html/forexbr_com_br;c:/windows/temp) in C:\zpanel\hostdata\zadmin\public_html\forexbr_com_br\wp-content\plugins\wp-super-cache\wp-cache-phase2.php on line 71 Bond Report: Treasury yields slide as surge in jobless claims point to slowing U.S. economic growth – Forex Brasil

Bond Report: Treasury yields slide as surge in jobless claims point to slowing U.S. economic growth


U.S. Treasury yields fell sharply Thursday as investors saw labor-market data pointing to rising unemployment and slowing economic growth due to business shutdowns in the face of the COVID-19 pandemic. Meanwhile policymakers in the U.S. and Europe are rolling out fiscal stimulus packages and are ramping up bond-buying programs.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, -5.97% slumped 14.1 basis points to 1.118%. The 2-year note yield TMUBMUSD02Y, -30.86% fell 3.9 basis points to 0.483%. The 30-year bond yield TMUBMUSD30Y, -2.68% fell 14.8 basis points to 1.740%.

What’s driving Treasurys?

Investors remain focused on the potential economic impact expected from the spread of the coronavirus, along with details of a U.S. fiscal stimulus package that is anticipated to run to $1 trillion or more.

The U.S. Treasury is considering the sale of 25- and 50-year bonds to help finance the fiscal stimulus package aimed at cushioning the economic blow from the pandemic, according to a Bloomberg News report citing sources familiar to the matter.

The report briefly sent long-term yields higher, until data showed a sharp surge in initial jobless claims in the most recent week pulled yields lower again. Some investors and analysts have called for the Treasury to issue longer-term debt to take advantage of the current ultra-low interest rate regime.

Government bonds in so-called peripheral eurozone economies like Italy received a lift last night after the European Central Bank announced a new €750 billion ($811 billion) asset-purchasing program

U.S. data painted a worrisome picture for U.S. economic growth. Initial jobless claims climbed by 70,000 to a seasonally adjusted 281,000 in the seven days ended March 14, the government said Thursday. That’s the highest level since September 2017.

See: U.S. jobless claims surge 70,000 to 281,000 in mid-March as coronavirus triggers layoffs

The Philadelphia Fed manufacturing index in March plunged to a reading of negative 12.7, close to an 8-year low, after recording a positive 36.7 in the prior month.

What did market participants’ say?

“The idea of central bank and pan-governmental intervention at this stage of a recession is not to save borrowers money. It is going to cost more even after QE kicks in. It is to allow them to borrow money, but painfully. The question of how much pain and who shares in the costs is for later. Attempting to do that on the front end – as Washington and EU policy makers may argue about – can delay the impact until it’s too late,” said Jim Vogel, an interest-rate strategist at FHN Financial, in a Thursday note.

See also: Fed sets new loan program designed to ease turmoil in money markets