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U.S. Treasury yields extended their fitful retreat on Friday after bonds struggled to sell off this week, with recent debt auctions underlining the voracious appetite for Treasurys.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, -0.78% was down 1.4 basis point to 1.891%, while the 2-year note rate TMUBMUSD02Y, -0.49% fell a basis point to 1.627%. The 30-year bond yield TMUBMUSD30Y, -0.62% slipped 1.7 basis points to 2.320%.
What’s driving Treasurys?
In a day without U.S. economic data, investors will look forward to further details on how a phase one deal will be concluded with China. President Donald Trump said on Tuesday that both he and President Xi Jinping would get together to sign the agreement, but it’s not clear at which venue they would meet.
Thin trading volumes in the Christmas holiday week meant that a trio of debt auctions drew the attention of bond buyers. Good results from all three sales helped to cap any yield surge, even as stock markets climbed to new heights. It underlined how the enormous demand for bonds among income-starved investors will likely keep a check on a sharp selloff in Treasurys next year.
What did market participants’ say?
Analysts at NatWest Markets said momentum in the Treasurys action was bullish, after testing key support levels of around 1.95% in the last two weeks only to retreat.
“This is a good sign for [Treasury] markets, and likely a sign at least technically that the bearish pressure of this month may be alleviating, setting up for a better performance in January,” they said.
