Treasury yields hold ground as global stocks rally on central bank rate-cut hopes


U.S. Treasury yields were mostly unchanged on Wednesday as global stock-markets rallied on the expectation of further stimulus by central banks, after the Federal Reserve carried out a surprise 50 basis point interest rate cut on Tuesday.

What are Treasurys doing?

The 10-year Treasury note yield

TMUBMUSD10Y, -0.50%

  was unchanged at 1.004%, while the 2-year note rate

TMUBMUSD02Y, -1.20%

  was down 2 basis points to 0.701%. The 30-year bond yield

TMUBMUSD30Y, +0.17%

  was virtually flat at 1.623%, FactSet data show.

What’s driving Treasurys?

The Fed cut its policy interest rate Tuesday ahead of its scheduled policy meeting in two weeks. The expectation now is for other central banks to follow suit and ease policy, too.

The Fed’s move followed a conference call by G7 finance ministers and central bank governors Tuesday that pledged measures to shore up global economic growth in the face of the coranavirus epidemic emanating from China.

A total of 93,455 cases of the COVID-19 virus have been reported with at least 3,198 deaths, according to the latest figures from Johns Hopkins Whiting School of Engineering’s Centers for Systems Science and Engineering.

Heightened expectations for more actions from monetary policymakers helped keep yields depressed even as stocks were set to trade higher on Wednesday.

Futures for the S&P 500

SPX, -2.81%

  and the Dow Jones Industrial Average

DJIA, -2.94%

  point to a positive start for Wall Street.

In U.S. economic data, the Automatic Data Processing employment report for last month is due for release at 8:15 a.m. ET. Institute for Supply Management’s non-manufacturing gauge for February is set for release at 10 a.m., giving a snapshot of the domestic-focused service sector.

Later, the Fed will release its Beige Book in the afternoon. A collection of anecdotes from businesses across the U.S., the Beige Book could show how the outbreak of COVID-19 is disrupting supply chains and upending normal business operations.

What did market participants’ say?

“Expectations remain high for global central banks to follow the Fed’s lead and offer further accommodation via rate cuts and/or balance sheet growth,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, in a Wednesday note.

Source : MTV