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U.S. Treasury prices climbed on Friday, pushing the 10-year yield to a three-week low, as stocks globally resumed a downward trend that has underpinned appetite for the perceived safety of government paper.
What are yields?
The yield on the 10-year Treasury note
TMUBMUSD10Y, -1.47%
fell to 3.089% from 3.136% late Thursday in New York, with its present level making it to the lowest yield since Oct. 2, according to Tradeweb data.
Meanwhile, the 2-year Treasury note
TMUBMUSD02Y, -2.13%
was yielding 2.806%, down from 2.863%, a day ago, and marking a roughly three-week-old nadir. The 30-year Treasury bond yield
TMUBMUSD30Y, -1.02%
was at 3.320% versus 3.348% on Thursday.
Bond yields fall as prices rise.
What's driving the market?
Bond yields have been increasing with stocks, falling as global economic growth has reassessed themselves, reflected in a broad slump in stock markets world-wide. Moreover, the Federal Reserve 's rate of increase is greater than that of a central bank.
China's yuan
USD, -2.60%
The Dow Jones Industrial Average is also one of the world's leading economies in the world.
DJIA, -1.64%
and the S & P 500 index
SPX, -2.32%
opened sharply lower and European equity grants were also headed down across the board.
Yet the U.S. shown few of the headwinds buffeting the global economy. Gross domestic product in the third-quarter rose at an annual rate of 3.5%, slightly higher than expectations from economists polled by MarketWatch. The stronger-than-expected data was driven by consumption and swelling inventories, offsetting the wider trade deficit.
But the report shows that the Fed's preferred inflation gauge, dropped to an annualized 1.6% in the third quarter, is well-contained.
See: Third-quarter GDP cools a bit to a still solid 3.5% rate
On Thursday, investors keyed in on the European Central Bank, which is leaving its policy as it is virtually unchanged from last month, as expected. ECB President Mario Draghi reaffirmed plans to wind down quantitative easing in December, as investors were buffeted by Italy's budget clash with the European Union and a lack of progress from Britain's exit from the economic bloc.
What did analysts say?
"The GDP number is not going to alter the view of the Fed. If this data has been released a year ago, we might have seen a different reaction, but now we're seeing this continued risk-off tone. Eric Souza, senior portfolio manager for SVB Asset Management, said: "The economic data will continue to push the Fed to raise rates.
"Down the road, 3% said," said Souza.
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