By Deborah Levine, MarketWatch
SAN FRANCISCO (MarketWatch) — This is why Treasury yields don't move very much: every time investors think the fundamental picture is consistent enough in one direction — improving or deteriorating — someone somewhere else thinks it makes U.S. debt more or less attractive enough to go in the opposite direction.
For Treasurys, yields slipped on Thursday after touching a technical level that triggered buying out of Asia, analysts at CRT Capital Group said.
“The willingness of overseas buyers to commit has to dampen some of the bearish sentiment that seemed so rife yesterday,” CRT’s David Ader and Ian Lyngen wrote in a note.
The move was small: 10-year yields 10_YEAR -1.15% fell 2 basis points to 1.81%. But the shift was popular enough to boost overnight trading volume to over twice the recent average, analysts said.
Bond yields move inversely to prices and a basis point is one one-hundredth of a percentage point.
“Ten-year yields are holding below the 200-day moving average of 1.81% for now on the back of decent overseas buying again,” said Tom Di Galoma, managing director at Navigate Advisors. “The economic data seems to be printing better than expected over the last three weeks and market participants are bracing for higher yields near 1.90%.”
The move in yields was larger for longer-dated debt and less pronounced for short-term securities, narrowing the gap in yields between them. Many traders and investors follow the changing shape of the yield curve — in this case flattening — more than the overall direction of the bond market.
Thirty-year yields 30_YEAR -1.30% fell 4 basis points to 2.97%, after briefly touching 3%.
As for news, a European Union summit began but expectations for anything big related to Spain or Greece were ratcheted down in recent days.
Marginally positive new for Spain — that Moody’s Investors Service didn’t downgrade the country’s debt rating — was given credit for the biggest jump in 10-year yields in a month. Read: Treasurys lose appeal after Spain keeps rating.
Reports said the Netherlands will reject new aid for Greece at the EU summit, but that didn’t drive a market move. Strategists at RBS Securities also pointed out a report in The Financial Times, first circulated late Wednesday, about a “secret opinion” from the EU Council’s top legal advisor arguing that creating a banking supervisor to oversee the whole euro zone is illegal. Read: Europe banking supervisor plan ‘illegal.’
Traders also took little direction from China’s data showing its economy grew at a 7.4% pace, roughly in-line with forecasts. Read: China’s GDP slows but may mark bottom.
