Treasury yields are easing with US stocks flat or up; investors evaluate US tax bill

The 30-year U.S. Bond yields rose to their highest level in nearly 19 months, before falling on Thursday. Worries about the U.S. Fiscal Outlook and the demand for government bonds remained, while Wall Street stocks ended either flat or slightly higher.

After recent losses, the U.S. Dollar has strengthened.

The yields increased earlier, after the U.S. House of Representatives approved President Donald Trump's proposed tax bill with a single vote. This added to concerns about the debt burden of the country.

Moody's was the last major credit rating agency to remove the U.S. from its triple-A status late last week.

Some buyers were attracted by the recent drop in bond prices. The yields, which are inversely related to the price, dropped.

The 30-year bond rate was down 3.7 basis points at 5.0521% by late Thursday. The yield of the benchmark 10-year U.S. notes fell to 4.551%. It had reached the highest level since February 12 during the session, at 4.629%.

After a sharp drop in the previous session, the Nasdaq closed higher while the S&P and Dow ended flat. Alphabet shares rose 1.4%, while Nvidia's stock was up 0.8%.

Jake Dollarhide is chief executive officer of Longbow Asset Management, Tulsa in Oklahoma. It's seen as a leader."

The Dow Jones Industrial Average dropped 1.35 points at 41,859.09; the S&P500 fell 2.60 points or 0.04% to 5,842.01; and the Nasdaq Composite grew 53.09 points or 0.28% to 18,925.74.

Solar energy shares fell after Trump's proposed tax bill was expected to eliminate a number green-energy subsides. First Solar's shares closed down 4.3%.

The bill would provide new tax breaks for car loans and tips, and increase spending on border security and military. The Congressional Budget Office (CBO) estimates that Trump's tax cut bill will add $3.8 billion to the $36.2 trillion of U.S. national debt in the next decade.

Weak demand for the sale of $20 billion in 20-year bonds Wednesday heightened concerns over reduced interest rates on U.S. government debt.

The benchmark 10-year and 30-year yields both rose by about 50 basis points in the last month.

Ed Al-Hussainy is a senior rates analyst with Columbia Threadneedle Investments. He said that the Treasury market was looking for a "circuit breaker". This can be in the form poor labor market statistics to trigger (Federal Reserve's) cuts and trigger an assessment of the strength the economy.

On Thursday, the German bond yields on long-term bonds also reached a new two-month-high.

The MSCI index of global stocks fell by 2.94 points or 0.34% to 871.01. The pan-European STOXX 600 fell by 0.64%.

Data revealed that the British government borrowed more in April than was expected. The euro zone's business activity also unexpectedly returned to contraction territory.

After the data, the euro fell while the U.S. Dollar rose after three consecutive days of losses. The euro last fell 0.41% to $1.1283. The dollar gained 0.29% against the Japanese yen to reach 144.08.

Bitcoin, on the other hand, reached a new high partly because investors were looking for alternatives to U.S.-based assets. Bitcoin's last gain was 3.25%, at $111 795 51.

The oil price was affected by a report that OPEC+ has discussed a production boost for July.

Brent futures dropped 47 cents or 0.72% to settle at $64.44 per barrel. U.S. West Texas Intermediate Crude eased 37 cents or 0.6% to settle at $60.20.

Spot gold dropped 0.57%, to $3,295.06 per ounce.

(source: Reuters)