- US 10-year Treasury yields stay sidelined around 1.24%.
- Japan’s Government Pension Investment Fund (GPIF) cut US government bonds and bills holdings by record in a year to March.
- GPIF’s allocations for French, Italian, German and UK bonds all increased slightly.
- Covid updates, deadlock over stimulus and Fed’s rejection to easy money confuse bond traders.
US 10-year Treasury yields lick Friday’s wounds around 1.2350%, down 0.5 basis points (bps) amid the initial Asian session trading on Monday.
The risk barometer remains pressured but fails to highlight Bloomberg’s news conveying a record cut in the US government bond and bill’s weight, from 47% to 32%, by Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund, during the 12 months ended in March.
The news piece also mentioned, “Treasury Department data show Japanese investors overall have sold a net $24 billion of U.S. government bonds since the start of the Asian nation’s current fiscal year on April 1.” Bloomberg added, “They offloaded $35 billion in the 12 months before that, the most in three years.”
It should be noted, however, that the GPIF has given a higher allocation, at least over 1.7% to the government securities from France, Italy, Germany and the UK, per Bloomberg.
Behind the Japanese government’s motives could be the US Federal Reserve’s (Fed) indecision over the next move as well as a deadlock over the infrastructure spending in the Senate. Also likely to have challenged the Japanese bond buyers could be the gradually rising covid woes in the UK and the US and better performance of equities.
It’s worth mentioning that the same seems to exert downside pressure on the US Dollar Index (DXY), currently unchanged around 92.08 after snapping a four-day downtrend, also reversing from a monthly low, on the previous day.
While the bond news may weigh on the DXY, US ISM Manufacturing PMI for July, expected 60.8 versus 60.6 prior, becomes the key event of the day as China’s official activity numbers have already eased during the weekend and Caixin figures may follow the suit.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
GBP/USD rebounds above 1.2950 after BoE policy announcements
GBP/USD trades in positive territory above 1.2950 on Thursday. The Bank of England (BoE) lowered the policy rate by 25 basis points as expected but the upward revision to inflation projections helped the pair edge higher. Market focus now shifts to the Fed's policy decisions.
EUR/USD extends recovery toward 1.0800 as USD retreats ahead of Fed
EUR/USD continues to push higher toward 1.0800 on Thursday. The pair finds support from a broad US Dollar retreat, as traders unwind their Trump win-inspired USD longs ahead of the Federal Reserve's highly-anticipated policy announcements.
Gold rebounds above $2,680, awaits Fed rate decision
Gold recovers following Wednesday's sharp decline and trades above $2,680. The benchmark 10-year US Treasury bond yield edges lower after Trump-inspired upsurge, allowing XAU/USD to hold its ground ahead of the Fed policy decisions.
Federal Reserve expected to deliver 25 bps interest-rate cut, shrugging off Trump victory
The Federal Reserve is widely expected to lower the policy rate after Donald Trump won the US presidential election. Fed Chairman Powell’s remarks could provide important clues about the rate outlook.
Outlook for the markets under Trump 2.0
On November 5, the United States held presidential elections. Republican and former president Donald Trump won the elections surprisingly clearly. The Electoral College, which in fact elects the president, will meet on December 17, while the inauguration is scheduled for January 20, 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.