January 17, 2020 / 2:53 PM / a month ago

TREASURIES-U.S. yields rise on strong housing and manufacturing data

    By Ross Kerber
    BOSTON, Jan 17 (Reuters) - U.S. Treasury yields rose on
Friday after strong homebuilding and manufacturing reports and
upbeat corporate earnings, while traders eyed the potential
impact of a new government bond coming by summer.
    The benchmark 10-year yield was up 2.5 basis
points in morning trading at 1.8337%.
     U.S. homebuilding surged to a 13-year high in December
according to federal data released Friday morning, suggesting
the housing market recovery was back on track amid low mortgage
rates and could help support the longest economic expansion on
record.
    "The housing data definitely got us going," said Tom Simons,
money market economist for Jefferies. Investors likely paid
extra attention to the number because few other sectors have
shown much growth lately except for consumer spending.
    Simons said longer-term yields also may have gotten a boost
because of Thursday's announcement by the U.S. Treasury that it
will begin issuing a new 20-year bond in the first half of 2020
as it seeks to plug budget deficits expected to top $1 trillion
annually.
    "The long end of the curve is more sensitive than it might
otherwise be to positive economic news," Simons said.
    The 30-year bond was up 3.5 basis points at
2.2936%. Meanwhile the two-year  U.S. Treasury yield,
which typically moves in step with interest rate expectations,
was down less than a basis point at 1.5654%.
    U.S. manufacturing output rose unexpectedly in December as a
drop in motor vehicle output was outpaced by increases in
production of other durable goods, food and beverages, and other
products.
    U.S. stock indexes opened at record highs on Friday.
 Shares were driven by optimism over corporate
earnings, upbeat economic data and indications of resilience in
China's economy.
    
    January 17 Friday 9:38AM New York / 1438 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.525        1.5561    -0.003
 Six-month bills               1.525        1.5621    0.000
 Two-year note                 100-29/256   1.5654    -0.003
 Three-year note               99-194/256   1.5834    0.005
 Five-year note                100-140/256  1.6343    0.009
 Seven-year note               100-4/256    1.7475    0.014
 10-year note                  99-64/256    1.8337    0.025
 30-year bond                  101-192/256  2.2936    0.035
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         8.00         1.25    
 spread                                               
 U.S. 3-year dollar swap         4.50         1.00    
 spread                                               
 U.S. 5-year dollar swap         1.50         1.00    
 spread                                               
 U.S. 10-year dollar swap       -4.50         0.25    
 spread                                               
 U.S. 30-year dollar swap      -31.75        -0.75    
 spread                                               
 
 (Editing by Nick Zieminski)
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