logo
Plus   Neg
Share
Email

Treasuries Move Notably Higher After ECB Slashes Growth Forecast

Treasuries moved notably higher over the course of the trading session on Thursday, extending the upward trend seen over the past few sessions.

Bond prices moved to the upside early in the session and climbed more firmly into positive territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.6 basis points to 2.636 percent.

The strength among treasuries came as traders looked to the relative safety of bonds after the European Central Bank slashed its economic growth forecast, citing lingering, mainly external uncertainties.

The ECB also said it now expects eurozone interest rates to remain at the current level at least till the end of this year.

The eurozone growth outlook for this year was cut to 1.1 percent from 1.7 percent, while the outlook for next year was trimmed to 1.6 percent from 1.7 percent.

The risks surrounding the euro area growth outlook are still tilted to the downside, on account of the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets, the ECB said.

"While there are signs that some of the idiosyncratic domestic factors dampening growth are starting to fade, the weakening in economic data points to a sizeable moderation in the pace of the economic expansion that will extend into the current year," said ECB President Mario Draghi.

He added, "The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment."

Reflecting the concerns about the economic outlook, the ECB announced steps to preserve favorable bank lending conditions and the smooth transmission of monetary policy.

The ECB said a new series of quarterly targeted longer-term refinancing operations (TLTRO-III) will be launched, starting in September 2019 and ending in March 2021, each with a maturity of two years.

Traders may also have seen bonds as a safe haven ahead of the release of the Labor Department's closely watched monthly jobs report on Friday.

Employment is expected to rise by 180,000 jobs in February after jumping by 304,000 jobs in January. The unemployment rate is expected to dip to 3.9 percent from 4.0 percent.

For comments and feedback contact: editorial@rttnews.com

Market Analysis

Follow RTT