MW: Treasurys slip after industrial production data
By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) — Treasury prices inched mostly lower after data on industrial production in September gained the most in seven months.
Federal Reserve data showed that manufacturing output rose 0.6% in September, the most since February and above consensus estimates of a 0.4% gain. The data had been delayed due to the government shutdown earlier this month.
The benchmark 10-year note 10_YEAR +0.36% yield, which moves inversely to price, rose half a basis point to 2.522%. The 30-year bond 30_YEAR +0.33% yield rose half a basis point to 3.608%, and the 5-year note 5_YEAR +0.78% yield fell slightly to 1.289%.
“The markets are starting off yet another week in a range trade, with the week’s plethora of data and events likely to keep participants on their toes,” said Gennadiy Goldberg, U.S. strategist at TD Securities, in a note. “The key questions the markets will attempt to answer in this week’s data barrage will be two-fold: how the economy fared ahead of the government shutdown and how deeply the shutdown impacted preliminary October activity indicators.”
Treasury yields have moved lower in recent weeks as signs of a slowing economic recovery collided with an ongoing debate over a federal budget and increase to the borrowing limit, pushing back expectations of shifts in the Federal Reserve’s monetary policy.
But auctions of $96 billion in Treasury notes this week will test whether the increase in demand in recent weeks remains strong. They include $32 billion of 2-year notes 2_YEAR +2.57% on Monday, $35 billion of 5-year notes on Tuesday, and $29 billion of 7-year notes 7_YEAR +0.37% on Wednesday.
The Federal Open Market Committee will meet this week to discuss monetary policy. Most market participants expect that no changes will be made to the current pace of the central bank’s bond-buying stimulus program, which has helped keep benchmark rates low. However, the market will look for signals about how future changes could unfold.
Ben Eisen is a MarketWatch reporter based in New York.
