September 20, 2018 / 2:56 PM / a month ago

TREASURIES-U.S. long-term yields drift lower on trade, Brexit uncertainty

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 20 (Reuters) - U.S. long-dated Treasury
yields fell on Thursday, as persistent trade tension between
China and the United States as well as  Brexit uncertainty
spurred investors to seek the safety of government bonds.
    Upbeat U.S. economic data on Thursday pushed yields a little
higher, but that was short-lived, with the market mostly focused
on the ongoing trade conflict between the two largest economies
in the world.
     China's commerce ministry said on Thursday it hopes the
United States will show sincerity and take steps to correct its
behavior, after both countries slapped new tariffs on each
other's goods this week in an escalating trade war.
    Some analysts were concerned that China will resort to other
non-trade measures to fight back against the United States.
    "We have been moving higher in yields ever since the last
jobs report showed higher wages and now with the increased
tension between the U.S. and China, there are some concerns that
the Chinese would back away from owning Treasuries," said Lou
Brien, market strategist, at DRW Trading in Chicago.
    China remains the largest non-U.S. holder of Treasuries, but
in July its holdings of U.S. government bonds declined to $1.171
trillion. China's July outflow of Treasuries was the third in
the past four months.
    Uncertainty on Brexit was also a factor that weighed on U.S.
Treasury yields, analysts said, although British Prime Minister
Theresa May said on Thursday she believed there was a growing
desire to sit down and reach a deal. 
    But she also said the UK was preparing to leave the European
Union without an agreement if there were no proposal that it
deemed acceptable.
    In morning trading, U.S. 10-year yields were last at 3.066 
percent, down from 3.083 percent late on Wednesday.
    U.S. 30-year yields were at 3.205 percent, from
Wednesday's 3.237 percent.
    U.S. 2-year yields, meanwhile, were unchanged at 2.8076
percent, from levels on Wednesday.
    Data showing better-than-expected U.S. jobless claims and
higher Philadelphia Federal Reserve manufacturing index lifted
yields earlier in the session, but that was not sustained.

    
      September 20 Thursday 10:45AM New York / 1445 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             2.1275       2.1686    0.003
 Six-month bills               2.3125       2.3722    0.007
 Two-year note                 99-166/256   2.8118    0.005
 Three-year note               99-148/256   2.8985    0.003
 Five-year note                99-14/256    2.9568    -0.003
 Seven-year note               98-64/256    3.0313    -0.009
 10-year note                  98-88/256    3.0701    -0.013
 30-year bond                  95-248/256   3.2106    -0.026
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        17.50         0.00    
 spread                                               
 U.S. 3-year dollar swap        15.25         0.50    
 spread                                               
 U.S. 5-year dollar swap        12.00         0.50    
 spread                                               
 U.S. 10-year dollar swap        6.25         0.75    
 spread                                               
 U.S. 30-year dollar swap       -6.50         1.25    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss)
  
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