May 6, 2019 / 1:31 PM / 18 days ago

TREASURIES-U.S. bond yields fall on U.S.-China trade tension

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    NEW YORK, May 6 (Reuters) - U.S. Treasury yields held at
lower levels in early U.S. trading on Monday, as investors
favored low-risk government bonds over stocks and other risky
assets due to renewed trade tension between China and the United
States. 
    Wall Street was expected to open sharply lower after U.S.
President Donald Trump on Sunday threatened to increase tariffs
on $200 billion of Chinese-made goods to 25% from 10%, reversing
his February decision to hold them at 10% as the world's two
biggest economies were making progress on trade negotiations.

    Investors fear that derailed trade talks between and Beijing
would touch off a global slowdown, analysts said, which offset
recent encouraging data on China, Europe and the United States.
    "Though the high-frequency flow of economic releases has
improved, rising global tensions and fears that the U.S. will
impose additional tariffs against China are weighing down
investor sentiment," Stan Shipley, a strategist at Evercore ISI
wrote in a research note.
    Monday's drop in bond yields was mitigated by this week's
Treasury supply.
    The U.S. Treasury Department will sell $84 billion in
coupon-bearing debt including $38 billion in three-year notes
, $27 billion in 10-year notes and
$19 billion in 30-year bonds.
    At 9:13 a.m. (1313 GMT), the yields on benchmark 10-year
Treasury notes were 2.4818%, down 4.8 basis points
from late on Friday, while the two-year yields were
2.2884%, down 5.1 basis points. 
May 6 Monday 9:16AM New York / 1316 GMT
                               Price                  
 US T BONDS JUN9               148-4/32     24/32     
 10YR TNotes JUN9              123-204/256  15/32     
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             2.37         2.4166    -0.014
 Six-month bills               2.38         2.4483    -0.008
 Two-year note                 99-237/256   2.2884    -0.051
 Three-year note               99-254/256   2.2525    -0.056
 Five-year note                99-230/256   2.2716    -0.058
 Seven-year note               100-4/256    2.3725    -0.059
 10-year note                  101-64/256   2.48      -0.050
 30-year bond                  102-48/256   2.8898    -0.036
         YIELD CURVE           Last (bps)   Net       
                                            Change    
                                            (bps)     
 10-year vs 2-year yield       19.00        0.00      
 30-year vs 5-year yield       61.70        2.30      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        11.00         0.25    
 spread                                               
 U.S. 3-year dollar swap         7.75         0.25    
 spread                                               
 U.S. 5-year dollar swap         5.00         0.50    
 spread                                               
 U.S. 10-year dollar swap       -1.75         0.00    
 spread                                               
 U.S. 30-year dollar swap      -24.25        -0.25    
 spread                                               
 
 (Reporting by Richard Leong
Editing by Chizu Nomiyama and David Gregorio)
  
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