Bond Report: Treasury yields push slightly higher day after big drop

Treasury yields ticked up on Thursday with less than 48 hours left in regular trading for 2017, after yields for the 10-year U.S. government saw its biggest one-day drop in about three months on Wednesday.

Still, trading in government paper remains relatively subdued, as investors focus on coming data and take stock of coming monetary policy from global central bankers, including the Bank of Japan, which has hinted at tapering its easy-money stance.

The bond market will close early on Friday, at 2 p.m. Eastern, and will be closed on Monday for New Year’s.

What are Treasurys doing?

The yield for the benchmark 10-year Treasury note TMUBMUSD10Y, +0.90% was up slightly at 2.433%, compared with points to 2.412% late Wednesday in New York, when it saw the steepest one-day decline since Sept. 5, according to WSJ Market Data Group. The 30-year bond yield TMUBMUSD30Y, +0.29% was at 2.774%, versus 2.746% on Wednesday, when it fell by the most in a day since Dec. 1.

The 2-year note yield TMUBMUSD02Y, +0.42% ticked up to 1.907% from 1.899% late Wednesday.

Bond prices and yields move inversely.

What’s driving Treasurys

Market participants attributed at least some of Wednesday’s moves, with prices rising and yields retreating, on investors consolidating their gains in riskier assets. like stocks, into government paper.

However, new tax-policy legislation, signed into law last week, has been the biggest contributor to the recent trend of yields edging higher as investors anticipate that stimulative effect of new laws will weigh on appetite for existing bonds. Yields rise as prices fall.

Meanwhile, meeting minutes from the Bank of Japan’s policy makers’s most recent gathering released Thursday indicate the central bank has started talking about the possibility of pulling back its aggressive monetary easing initiative. That would put the central bank in similar footing with the European Central Bank, which has begun tapering its quantitative easing efforts.

The Federal Reserve already has hiked interest rates three times in 2017, citing improving economic conditions, although stubbornly low inflation remains a main concern.

Against the backdrop of better conditions across the globe, appetite for the safety of government bonds may wane somewhat, barring any surprise events.

What data are in focus?

Weekly jobless claims for last week are due at 8:30 a.m. Eastern Time, forecast to show 239,000 Americans filed for unemployment benefits last week, down from 245,000 the week before.

Also out at the same time is data on advance trade in goods for November, followed by the purchasing managers index for Chicago at 9:45 a.m. Eastern.

On Wednesday, U.S. consumer confidence fell to 122.1 in December, from a 17-year high.

Which other assets are in focus?

Japanese 10-year benchmark yields TMBMKJP-10Y, +5.50% were at 0.052%, compared with 0.034% on Wednesday, according to FactSet data. Meanwhile, 10-year German bond yields TMBMKDE-10Y, +6.10% known as bunds, were at 0.403%, versus 0.382% in the prior session.

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