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Treasurys Calm Ahead of Vote on Health Bill
DOW JONES & COMPANY, INC. 10:59 AM ET 3/24/2017
U.S. government bonds were little changed Friday as investors awaited a House vote on health-care legislation.

In recent trading, the yield on the benchmark 10-year Treasury note was 2.414%, according to Tradeweb, compared with 2.418% Thursday. Yields fall when bond prices rise.

Initially expected Thursday, a House vote on a replacement to the Affordable Care Act was postponed by GOP leaders due to a lack of votes to pass the measure. A vote is now expected Friday, with President Donald Trump vowing to leave the 2010 health law in place if it fails.

The drama surrounding the health-care bill has gripped the financial markets this week, causing jitters in the stock market and bolstering demand for government bonds, which are viewed as haven assets.

Since Mr. Trump's win in November, investors have executed a variety of trades expressing confidence that he will be able to pass expansionary fiscal policies, such as tax cuts and infrastructure spending, that would boost growth and inflation.

The health-care bill isn't at the top of investors' wish list but is seen as a key test for whether GOP leaders, including Mr. Trump and House Speaker Paul Ryan (R., Wis.), can deliver on their promises.

On reason why investors were optimistic after the election was the "idea that Ryan and other Republican leaders had already done important spade work on all these issues last summer and were prepared to bring things that would work," said Jim Vogel, interest-rates strategist at FTN Financial.

Even if the House can pass a bill, the differences among Republicans that were on display this week could have a residual impact on the market until investors can "regain confidence that people are figuring out the next direction," he added.

With the attention on Congress, the bond market largely shrugged off data released Friday that continued to show a gradual increase in spending on long-lasting factory goods.

Orders for durable goods increased 1.7% in February from the prior month, above the 1.5% gain projected by economists surveyed by The Wall Street Journal.

A solid run of economic data helped justify the Federal Reserve's decision to raise short-term interest-rates this month.

Even as it raised rates, however, the Fed signaled it will tighten monetary policy at a gradual pace going forward, spurring a rally in bonds that pulled yields back from multiyear highs.

Write to Sam Goldfarb at [e-mail]


(END) Dow Jones Newswires
03-24-171059ET
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