May 21, 2019 / 2:55 PM / 3 months ago

TREASURIES-U.S. yields rise as stocks advance on Huawei news

    By Gertrude Chavez-Dreyfuss
    NEW YORK, May 21 (Reuters) - U.S. Treasury yields edged
higher on Tuesday, lifted by gains in Wall Street shares and
higher risk appetite overall after the United States eased trade
restrictions on Chinese telecommunications equipment maker
Huawei Technologies.
    The move was a step in the right direction in terms of
calming escalating trade tensions between the United States and
China, analysts said. 
    The United States on Tuesday temporarily eased trade
restrictions on China's Huawei to minimize disruption for its
customers. The U.S. Commerce Department blocked Huawei         
from buying U.S. goods last week, saying the firm was involved
in activities contrary to national security.
    Yields on U.S. benchmark 10-year notes and 30-year bonds
rose to one-week highs on Tuesday, while those on two-year notes
hit two-week peaks.
    "This is partly optimism in equities causing a reversal of
the moves we saw last week," said Subadra Rajappa, head of U.S.
rates strategy at Societe Generale in New York, as well as a 
reduction in the markets' rate cut forecasts. 
    "There's optimism about progress in the ongoing U.S.-China
trade talks," she added.
    In mid-morning trading, U.S. 10-year note yields rose to
2.426%, up from 2.414% late on Monday, after earlier
hitting a one-week high of 2.435%. 
    Yields on U.S. 30-year bonds advanced as well to 2.842%
, up from 2.835% on Monday. Earlier in the session,
30-year yields touched one-week highs of 2.849%.
    On the short end of the curve, U.S. 2-year yields were up at
2.245%, compared with Monday's 2.223%.
    U.S. yields, however, briefly slipped after U.S. home sales
unexpectedly fell in April amid persistent weakness in the
lower-priced segment of the market. 
    The National Association of Realtors said on Tuesday
existing home sales fell 0.4% to a seasonally-adjusted annual
rate of 5.19 million units last month. March's sales pace was
unrevised at 5.21 million units.
    But Jon Hill, U.S. rates strategist at BMO Capital Markets
in New York, said details of the housing report showed a much
healthier picture. He cited gains in condominium and co-op sales
and smaller declines in existing home sales compared to the
previous month.
    "All in all, another solid read on the housing market that
is consistent with the narrative of stabilization, rebound in
the sector," he said.
    
      May 21 Tuesday 10:43AM New York / 1443 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             2.34         2.3868    -0.004
 Six-month bills               2.345        2.4127    0.000
 Two-year note                 100-2/256    2.2455    0.023
 Three-year note               99-204/256   2.1957    0.022
 Five-year note                100-32/256   2.223     0.020
 Seven-year note               100-88/256   2.321     0.017
 10-year note                  99-140/256   2.4264    0.012
 30-year bond                  100-164/256  2.8431    0.008
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         5.75         0.00    
 spread                                               
 U.S. 3-year dollar swap         4.00         0.00    
 spread                                               
 U.S. 5-year dollar swap         0.75         0.00    
 spread                                               
 U.S. 10-year dollar swap       -4.75         0.25    
 spread                                               
 U.S. 30-year dollar swap      -28.00         0.00    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss
Editing by Paul Simao)
  
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