May 13, 2019 / 2:26 PM / 13 days ago

TREASURIES-U.S. yields hit six-week lows as China plans tariff retaliation

 (Adds quote, table)
    By Richard Leong
    NEW YORK, May 13 (Reuters) - U.S. Treasury yields fell to
six-week lows on Monday as investors piled into low-risk assets
after China announced plans to impose additional tariffs on
U.S.-made goods in retaliation against a U.S. increase in duties
on Chinese imports on Friday. 
    China's finance ministry said earlier Monday it plans to set
import tariffs ranging from 5% to 25% on 5,140 U.S. products on
a target list worth about $60 billion. It said the tariffs will
take effect on June 1.            
    Beijing's response rattled already jittery investors who
were caught off guard by last week's breakdown of efforts reach
a trade deal between the world's biggest economic powers.
    Investors and analysts are assessing the impact from this
round of tariffs on global business activities.
    "With rising protectionist measures, the damage to economic
growth is increasing," said Stephen Gallagher, U.S. chief
economist at Societe Generale in New York.
    Gallagher estimated the latest round of U.S. and Chinese
tariffs may reduce global economic growth by 0.15%.
    At 10:05 a.m. (1405 GMT), the yield on the benchmark 10-year
Treasury was 5.3 basis points lower at 2.4015% after
touching 2.398%, the lowest since March 29. 
    Ten-year yields fell below those on three-month Treasury
bills. A sustained inversion of this part of the
yield curve has preceded every U.S. recession in the past 50
years.
    As investors shifted money into Treasuries, yen, gold and
other safe-haven assets, they pulled money out of stocks and
other risky investments. Wall Street's main indexes fell sharply
in early trading with the S&P 500 losing 2.06%.
May 13 Monday 10:07AM New York / 1407 GMT
                               Price                  
 US T BONDS JUN9               149-14/32    25/32     
 10YR TNotes JUN9              124-120/256  16/32     
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             2.37         2.4166    -0.012
 Six-month bills               2.36         2.4209    -0.022
 Two-year note                 100-34/256   2.1803    -0.072
 Three-year note               99-242/256   2.1439    -0.070
 Five-year note                100-86/256   2.1781    -0.072
 Seven-year note               100-152/256  2.2822    -0.064
 10-year note                  99-200/256   2.3997    -0.055
 30-year bond                  100-172/256  2.8416    -0.031
         YIELD CURVE           Last (bps)   Net       
                                            Change    
                                            (bps)     
 10-year vs 2-year yield       21.80        2.00      
 30-year vs 5-year yield       66.30        4.05      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         8.25        -1.50    
 spread                                               
 U.S. 3-year dollar swap         5.25        -2.00    
 spread                                               
 U.S. 5-year dollar swap         2.50        -1.25    
 spread                                               
 U.S. 10-year dollar swap       -3.50        -1.50    
 spread                                               
 U.S. 30-year dollar swap      -28.00        -2.25    
 spread                                               
 

 (Reporting by Richard Leong)
  
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