July 9, 2018 / 7:46 PM / 5 months ago

TREASURIES-U.S. bond prices fall as stocks gain for third straight day

    * U.S. to sell $69 bln coupon-bearing supply 
    * Domestic stocks helped by strong earnings outlook
    * U.S. yield curve stays at flattest level since 2007

 (Updates prices and stocks news, adds quote)
    By James Thorne
    NEW YORK, July 9 (Reuters) - Treasuries yields rose on
Monday as investors moved into equities and freed up cash for
new Treasuries auctions this week, following a strong U.S. jobs
report on Friday and a muted response to the start of U.S.
tariffs on Chinese imports.
    “We had flight to quality because of the trade tariffs. But
I think at the end this doesn’t mean a trade war is really
taking place,” said Tom di Galoma, managing director at Seaport
Global Securities LLC in New York. 
    The yield curve remained near its flattest spread since 2007
on low inflation expectations and rate hikes from the Federal
Reserve.
    Last week's jobs report showed lower-than-expected wage
gains, suggesting that inflation is not accelerating ahead of
this Thursday's core consumer price index inflation report.
    Investors made room for $69 billion worth of upcoming
auctions in 3-year and 10-year Treasury notes
 and 30-year bonds starting
Tuesday.           
    Domestic shares rose on Monday for the third session in a
row, led by bank and industrial stocks as investors looked
optimistically forward to second quarter earnings season.

    The Dow Jones Industrial Average rose 1.31 percent
and the S&P 500 was up 0.79 percent. 
    "There’s a bit of a risk-on trade going through based on an
anticipation that corporate earnings will be strong," di Galoma
said.
    The benchmark U.S 10-year note yielded 2.858
percent at 3:24 p.m. EDT (1924 GMT), up 2.7 basis points from
Friday. 
    The yield spread between 2-year and 10-year notes
 was at 29.50 basis points. Five-year and 30-year
Treasuries were 21.50 basis points apart.
    
July 9 Monday 3:24PM New York / 1924 GMT
                               Price                  
 US T BONDS SEP8               145-5/32     -16/32    
 10YR TNotes SEP8              120-36/256   -7/32     
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.925        1.9608    0.010
 Six-month bills               2.07         2.1203    0.005
 Two-year note                 99-226/256   2.5611    0.016
 Three-year note               99-230/256   2.6609    0.025
 Five-year note                99-110/256   2.7484    0.025
 Seven-year note               99-136/256   2.8244    0.027
 10-year note                  100-36/256   2.8583    0.027
 30-year bond                  103-44/256   2.964     0.022
         YIELD CURVE           Last (bps)   Net       
                                            Change    
                                            (bps)     
 10-year vs 2-year yield       29.50        1.40      
 30-year vs 5-year yield       21.50        0.50      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        25.25        -0.25    
 spread                                               
 U.S. 3-year dollar swap        21.25        -1.00    
 spread                                               
 U.S. 5-year dollar swap        14.75        -0.50    
 spread                                               
 U.S. 10-year dollar swap        7.75         0.00    
 spread                                               
 U.S. 30-year dollar swap       -3.75         0.75    
 spread                                               
 

    
 (Reporting by James Thorne; editing by Jonathan Oatis)
  
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