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Bond Report: Treasury yields fall as investors bet on lower rates

NEW YORK (MarketWatch) — The bid has returned to the Treasury market Friday after yields closed higher a day ago.

The yield on the 10-year TMUBMUSD10Y, -1.59% was down 2.3 basis points to 1.953%, according to data from Tradeweb. The two-year yield TMUBMUSD02Y, -4.57% declined two basis points to 0.597%.

Bond yields move inversely to prices.

Tom Tucci, managing director and head of Treasury trading at CIBC World Markets, said that bond investors booked profits Thursday, driving the market lower after Wednesday’s massive gains.

But that profit-taking has subsided, and Tucci expects the market to remain well-bid as European investors continue to flock to the U.S. in search of higher yields.

Selling on Thursday was most heavily concentrated in Japan, where investors unwound long positions on Treasurys and the U.S. dollar to book last-minute profits before the fiscal year ends on March 31.

“That was a tremendous gain for anyone in Asia who had been long the [Treasury] market,” Tucci said. “It was a gift, they certainly weren’t planning on it — everyone was expecting the Fed to be a little more hawkish.”

The Fed has signaled to the market that an interest-rate increase will remain on hold at least until September, which should be supportive of the market. The next test of the market’s strength will be next week’s auctions of newly issued two-, five- and seven-year notes.

Read: Treasury yields plummet after Fed hints at gradual hike

“Next week, we’ll move into some supply — then we’ll see how strong the bid is in the market,” Tucci said.

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Bond Report: Treasury yields fall as investors bet on lower rates Reviewed by on . NEW YORK (MarketWatch) — The bid has returned to the Treasury market Friday after yields closed higher a day ago. The yield on the 10-year TMUBMUSD10Y, -1.59% w NEW YORK (MarketWatch) — The bid has returned to the Treasury market Friday after yields closed higher a day ago. The yield on the 10-year TMUBMUSD10Y, -1.59% w Rating:
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