April 9, 2019 / 7:04 PM / 5 months ago

TREASURIES-U.S. yields fall on trade, global growth worries

    * IMF cuts global growth forecast for 2019
    * Trump threatens tariffs on EU products
    * Saudi Aramco to raise $12 billion from first bond issue
    * U.S. 3-year note auction shows lackluster results

 (Recasts, adds U.S. 3-year note auction results, analyst
comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, April 9 (Reuters) - U.S. Treasury yields slid on
Tuesday amid renewed concerns about a trade dispute between the
United States and the European Union, as well as worries about
the global economic outlook after the International Monetary
Fund reduced growth forecasts for 2019.
    The IMF warned that growth could slow further due to trade
tensions and Britain's potentially disorderly exit from the EU.

    "Traders should have expected the IMF news as its forecasts
generally lag other reliable estimates, but investors chased
risk last week on the idea that better recent data gave
full-year results a chance to recover," said Jim Vogel, interest
rates strategist at FTN Financial in Memphis, Tennessee.
    Vogel said the IMF news sparked some bond buying and equity
selling.
    Further weighing on risk appetite, analysts said, was news
that President Donald Trump threatened to impose U.S. tariffs on
$11 billion worth of EU products, with both economies embroiled
in a long-running aircraft subsidy dispute.
    The years-long spat relates to mutual claims of illegal aid
to plane giants, Netherlands-based Airbus and
U.S.-based Boeing Co, to help them gain advantage in the
world jet business.
    Gains in Treasury prices came after losses on Monday in the
midst of a mammoth offering by oil giant Saudi Aramco. Dealers
historically lock in borrowing costs for corporate bonds they
are underwriting by selling Treasuries as a hedge before the
deal is completed. Once the bond is sold, the dealer buys back
Treasuries to exit the rate lock.
    Saudi Aramco is set to raise $12 billion with its first
international bond issue after receiving more than $100 billion
in orders. State-owned Aramco's bond issue, split into
maturities ranging from three to 30 years, is seen as a gauge of
potential investor interest in the Saudi company's eventual
initial public offering.
    In afternoon trading, U.S. 10-year note yields fell to
2.497%, slightly down from 2.519% late on Monday.
    U.S. 30-year bond yields also dipped to 2.909%,
from 2.924% on Monday.
    On the short end of the curve, U.S. 2-year yields slipped to
2.343%, compared with Monday's 2.358%. 
    Also on Tuesday, the Treasury auctioned $38 billion in U.S.
three-year notes, and the results were not as strong as
expected. The bid-to-cover ratio fell to 2.47, below both last
month's 2.56 and the 2.63 average. Indirect bidders were awarded
42.7%, also below the 49.5% previously and the 46.4% average.
 
    After the auction, U.S. 3-year note yields were lower at
2.291%, from Monday's 2.314%.
    
      April 9 Tuesday 2:48 p.m. New York / 1848 GMT
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             2.375        2.4227    -0.006
 Six-month bills               2.395        2.4581    -0.007
 Two-year note                 99-210/256   2.3436    -0.014
 Three-year note               100-60/256   2.2915    -0.022
 Five-year note                99-44/256    2.3021    -0.024
 Seven-year note               99-20/256    2.3943    -0.025
 10-year note                  101-28/256   2.4971    -0.022
 30-year bond                  101-204/256  2.9094    -0.015
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         8.75        -1.00    
 spread                                               
 U.S. 3-year dollar swap         6.50        -0.50    
 spread                                               
 U.S. 5-year dollar swap         3.25        -0.50    
 spread                                               
 U.S. 10-year dollar swap       -2.00        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -24.75         0.00    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Dan Grebler
and Rosalba O'Brien)
  
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