Bond Report: Treasury yields hold ground as investors await U.S. housing data

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Treasury yields struggled for direction on Wednesday as bond-market traders looked ahead to U.S. housing data that could offer additional clues on how an important engine of the economy was faring.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, +0.22%   traded at 1.558%, up from 1.556% on Tuesday. The 2-year note yield TMUBMUSD02Y, +0.87%   inched 0.8 basis point higher to 1.418%, while the 30-year bond yield TMUBMUSD30Y, -0.03%   was virtually flat at 2.002%.

What’s driving Treasurys?

In data, U.S. housing starts for January are due at 8:30 a.m. ET, with economists polled by MarketWatch projecting an annualized pace of 1.440 million homes. Building permits are projected to come in at 1.453 million. Last month’s producer prices are also set for release in the morning.

Low bond yields and mortgage rates have helped lift homebuilding activity, but investors are attuned to weakness in the housing sector after analysts pored over disappointing details in the U.S. retail sales report last month.

As for the Federal Reserve, several members of the central bank’s policymaking group will speak on Wedneday, including Minneapolis Fed President Neel Kashkari, Dallas Fed President Robert Kaplan, and Atlanta Fed President Raphael Bostic.

Read: Expect a year of ‘general belt-tightening’ for the energy sector, says Fed’s Kaplan

The minutes from the Federal Open Market Committee’s late January meeting are also due out in the afternoon. They could shed light on how the central bank’s thinking on how it should react to global economic growth concerns as a result of China’s coronavirus epidemic. Fed Chairman Jerome Powell last week said that he would monitor the situation in China carefully.

What did market participants’ say?

“The FOMC minutes and a battery of Fed officials are in the spotlight today but probably won’t move the needle and is secondary these days to the news flow in China and Asia until the point where the Fed lowers its outlook for the economy and tiptoes towards a dovish bias on rates,” said Kenneth Broux, a strategist at Société Générale, in a note.

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