MW: Treasurys manage narrow gains following producer prices
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices rose slightly Wednesday, pushing long-term yields down a fourth straight session, as investors around the world digested the Federal Reserve's latest refrain that it would keep U.S. interest rates low "for an extended period."
Yields on 10-year notes (UST10Y 3.65, -0.05, -1.30%) , which move inversely to prices, fell 2 basis points to 3.65%.
Yields on 2-year notes (UST2YR 0.90, -0.03, -3.43%) were little changed at 0.92%.
Analysts are likely to debate whether the Federal Open Market Committee, the Fed's policy-setting arm, will change the wording of that all-important promise at their meeting next month, but bond analysts consider that unlikely. See recent story on the Fed.
"Nothing we've heard or read suggests now that April is more likely than March was," said David Ader and Ian Lyngen, bond strategist at CRT Capital Group.
"Concerns about unemployment, housing still at depressed levels, and the state of mortgage rates and yields in general when they fully stop quantitative easing were the dovish takeaways from the FOMC statement and we don't think those comfortably go away in a little over a month," the wrote in a note.
Also lending support for bonds, the Labor Department report said U.S. producer prices fell 0.6% in February, a wider drop than economists had expected. The cord rate, which excludes food and energy, showed an increase of 0.1% on the month. Read about PPI.
The report comes a day before the more closely followed consumer-price index, which gauges inflation at the retail level. Slower inflation is beneficial for bondholders because inflation erodes the value of fixed payments.
