November 15, 2018 / 3:46 PM / a month ago

TREASURIES-Prices rise as Brexit turmoil, weak stocks spark safe-haven bid

    * Brexit worries push investors to bonds
    * U.S. yields fall to two week lows
    * U.S. economic data comes out mixed; Fed tightening intact

 (Adds comment, byline, table, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 15 (Reuters) - U.S. Treasury prices rose on
Thursday, sending yields to two-week lows across the curve, as
concerns about a weak stock market and Britain's exit from the
European Union prompted investors to seek the safety of
government bonds.
    "There are just too many things going wrong at the moment.
People are scrambling for safety here," said Stan Shipley,
fixed-income strategist at Evercore ISI in New York.
    Days after drafting a divorce deal, Britain's exit from the
EU took a turn for the worse after Prime Minister Theresa May's
Brexit secretary and other ministers quit in protest as
euro-skeptic lawmakers stepped up efforts to oust her.

    Consequently, the U.S. Treasuries' 10-year
interest rate premium over British government bonds
rose to its highest since mid-1984. The spread separating the
benchmark 10-year gilt from its higher-yielding U.S. equivalent
widened to 174 basis points, a level last seen in June 1984,
according to data from Refinitiv.
    "Even though I and the chief economist here and really most
economists see no sign of recession any time soon, investors are
more concerned than we are," Shipley said. "They're seeing lower
oil prices, which is a sign of weak global demand, they're
seeing Brexit problems, and as a consequence those credit
spreads are rising rapidly."
    Widening credit spreads reflect anxiety in the market.
    U.S. stocks were down again on Thursday, led by a slide in
growth stocks including Facebook and Amazon.com Inc
.
    U.S. crude futures recovered on Thursday, but had
plunged 7 percent on Tuesday, down from a four-year high only a
month ago. Tuesday marked a 12th straight session of declines,
the longest losing streak on record, shaking a market that was
bracing for supply shortfalls just a month ago.
    Global factors overshadowed Thursday's slew of U.S. economic
data, which came out mixed, but should keep the Federal Reserve
on track to raise interest rates multiple times starting in
December. 
    U.S. retail sales were up 0.8 percent in October, but
excluding automobiles, gasoline, building materials and food
services, retail sales increased 0.3 percent last month, lower
than expected. These so-called core retail sales correspond most
closely with the consumer spending component of gross domestic
product.
    The other economic numbers such as U.S. jobless claims were
weaker than expected, while import prices rose more than
forecast, but underlying imported inflation pressures remained
tame amid a strong dollar.
    In mid-morning trading, benchmark 10-year Treasury note
yields fell to 3.092 percent, from 3.12 percent late
on Wednesday. 
    U.S. 30-year yields dropped to 3.341 percent,
compared with Wednesday's 3.355 percent.
    On the short end of the curve, U.S. two-year yields declined
to 2.837 percent, from 2.862 percent on Wednesday.
    
      November 15 Thursday 10:29AM New York / 1529 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             2.33         2.3762    0.000
 Six-month bills               2.45         2.515     -0.005
 Two-year note                 100-16/256   2.8415    -0.020
 Three-year note               99-248/256   2.8859    -0.033
 Five-year note                99-206/256   2.9174    -0.035
 Seven-year note               99-248/256   3.0049    -0.032
 10-year note                  100-72/256   3.0921    -0.028
 30-year bond                  100-148/256  3.3443    -0.011
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        19.25         0.25    
 spread                                               
 U.S. 3-year dollar swap        17.00         0.50    
 spread                                               
 U.S. 5-year dollar swap        14.25         0.25    
 spread                                               
 U.S. 10-year dollar swap        6.25         0.25    
 spread                                               
 U.S. 30-year dollar swap      -11.00        -0.50    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss, Editing by Bernadette
Baum)
  
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