U.S. stock futures are pointing to a lower open as the yield on the 10 yr. U.S. Treasury continues to climb closer to a 52 week high of 2.63 percent amid a new Bloomberg report about Beijing officials who are reviewing the country’s foreign exchange holdings have recommended halting or slowing purchases of U.S. Treasuries.
According to the unnamed Chinese officials cited in the Bloomberg report, the market for U.S. government bonds is becoming less attractive relative to other assets, and trade tensions with the U.S. may provide a reason to slow or stop buying American debt.
Currently, the U.S. 10 Yr. Treasury is 2.591 percent as of 8:47 a.m. EST, the highest level since March 2017.
The stock market rally in 2017, which saw major stock indexes gains over 20 percent, were underpinned by low interest rates with the 10 Yr. Treasury remaining under 2.50 percent throughout the majority of the year, despite 3 rate hikes in 2017 from the U.S. Federal Reserve.
Soft inflation in 2017, combined with modest inflation projections for 2018 from a recent Federal Reserve meeting in December, remains a concern for economists despite the U.S. unemployment rate remaining at a 17 yr. low in December and strong 3Q 2017 GDP result at 3.2 percent.
4Q and 2017 annual U.S. GDP will be released on January 26, 2018 at 8:30 EST
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