 |
| Old conundrum, new twist
|
| Inverted or flat, the yield curve points to a weaker Federal Reserve, not a downturn. (Full story)
|
|
|
|
|
|
|
|
NEW YORK (CNN/Money) -
Treasury bond prices rallied Wednesday after weaker-than-expected economic reports fueled fears of a possible economic slowdown.
The benchmark 10-year Treasury jumped 23/32 of a point to 101-31/32 to yield 4.00 percent, down from 4.09 late Tuesday.
The 30-year bond surged more than a full point to 117-10/32 to yield 4.25 percent, down from 4.31 in the previous session. Treasury prices and yields move in opposite directions.
The five-year note gained 17/32 to yield 3.85 percent, while two-year notes added 8/32 to yield 3.81 percent.
The Commerce Department revised growth in gross domestic product -- a measure of all goods and services produced in the United States -- down to a 3.3 percent annual rate in the second quarter, from an initial reading of 3.4 percent.
Economists surveyed by Briefing.com had expected an unrevised reading.
Inflation pressure was also slightly weaker than initially reported, the Commerce Department said. The price index for consumer spending was revised to a 3.2 percent annual rate, versus an initial estimate of 3.3 percent.
In other economic news, business activity in the Midwest slumped to 49.2 in August, contracting for the first time in more than two years as new orders for goods and services fell steeply, according to the National Association of Purchasing Management. A reading below 50 indicates contraction.
The report seemed to increase the chances of a pause in Federal Reserve interest rate hikes, pushing benchmark yields to their lowest level in nearly two months.
Inflation hurts bonds, as it erodes the value of the fixed-income investment. However, rising interest rates generally help the dollar, as they make dollar-denominated securities more attractive to foreign investors.
In currency trading, the dollar tumbled against the yen and the euro.
The euro bought $1.2348, up from $1.2221 late Tuesday. The dollar bought ¥110.57, down from ¥111.26 in the previous session.
_______________________
Click here for bond charts.
For the latest economic news, click here.
|
