July 25, 2019 / 2:08 PM / 5 months ago

TREASURIES-Yields rise as ECB's Draghi sees low risk of euro zone recession

    * ECB leaves rates unchanged, signals future easing
    * ECB's Draghi says outlook worsening, but recession risk
low
    * Treasury to sell $32 bln seven-year notes

    By Karen Brettell
    NEW YORK, July 25 (Reuters) - U.S. Treasury yields rose on
Thursday after European Central Bank President Mario Draghi said
that the bank sees a low risk of a recession in the euro zone,
even as he acknowledged a worsening outlook.
    Yields initially dropped after the central bank, which kept
interest rates unchanged for now, said in its statement it saw
rates at present or lower levels through mid-2020, giving up a
previous pledge to keep rates unchanged through next June. 
    It also tasked its staff to look at various other easing
options including restarting asset purchases.             
    Draghi’s comments regarding a low risk of a recession,
however, changed the direction of the market.             
    "Although he said things such as the outlook is getting
worse and worse, they still see the sign of a recession risk as
pretty low, so the market is interpreting this as somewhat
hawkish," said Jon Hill, an interest rate strategist at BMO
Capital Markets in New York.
    Benchmark 10-year Treasuries             fell 14/32 in price
to yield 2.097%, after earlier falling to 2.011%, the lowest
since July 8.
    Weak global growth is leading central banks to ease policy
globally, with the Federal Reserve viewed as certain to cut
rates when it meets next week.
    Interest rate futures traders are pricing in a 79 percent
chance of a 25-basis-point cut and 21 percent likelihood of a
deeper 50-basis-point decrease, according to the CME Group’s
FedWatch tool.
    The next major economic focus for the United States will be
Friday’s Gross Domestic Product (GDP) figures for the second
quarter.
    The Treasury Department will sell $32 billion in seven-year
notes on Thursday, the final sale of $113 billion in short and
intermediate-dated notes this week.
    A $41 billion auction of five-year notes on Wednesday and a
$40 billion sale of two-year notes on Tuesday both saw weak
demand.                          

 (Editing by Sonya Hepinstall)
  
 
 )
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below