Today’s Trading Activity – Yields Fall on BoE Outlook, Special Counsel Call for Grand Jury
Aug 3, 2017
The Treasury curve flattened on lower yields Thursday, falling to their lowest levels in more than a month. The 2-year yield dropped 2.0 bps to 1.34% as the 5-year yield lost 3.8 bps to 1.83% and the 10-year yield closed down 5.0 bps at 2.22%; all represented the lowest yields since at least June 27. The biggest move occurred before U.S. trading opened after the Bank of England left its policy unchanged but cut its forecast for economic growth and wage gains. Yields in the U.K. dropped the most and led a global rally in sovereign debt. A softer than expected ISM non-manufacturing report didn’t help the mood. However, the second notable shift lower followed a report that Special Counsel Mueller had impaneled a grand jury in conjunction with his probe into Russia’s involvement with the U.S. election and possible ties to the Trump administration. The news also weighed on stocks but a knee-jerk sell-off faded and the Dow managed to inch out another daily gain (+0.04%) and its sixth consecutive record close. The S&P fell 0.2% while the Nasdaq lost 0.4%.