December 23, 2019 / 3:32 PM / a month ago

TREASURIES-U.S. yields slip as investors square up ahead of year-end

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Dec 23 (Reuters) - U.S. Treasury yields were
little changed to slightly lower on Monday in generally thin
trading, as market participants squared up positions going into
the year-end.
    A weaker-than-expected U.S. durable goods report for
November pushed yields a little lower early in the session. The
details of the report, though, were not as soft as the headline
suggested, analysts said, lifting yields off their lows.
    U.S. orders for non-defense capital goods excluding
aircraft, a closely watched proxy for business spending plans,
edged up 0.1% last month, with the decline in orders for
machinery offsetting the surge in demand for electrical
equipment, appliances, and components.
    "When you go through parts of the report, you are less
discouraged because all of it is defense orders, which are quite
volatile," said Stan Shipley, fixed-income strategist at
Evercore ISI in New York. 
    The so-called core capital goods orders rose by an unrevised
1.1% in October. Economists polled by Reuters had forecast core
capital goods orders gaining 0.2% in November. 
    Overall, trading is expected to slow in the
holiday-shortened week, and ahead of the year-end.
    "It's going to be thin volume," said Shipley. "People would
want to lock in their positions over the next week or two. You
really don't want to destroy the good returns you have this year
by taking an outside bet."
    So far this year, the ICE Bank of America Merrill Lynch U.S.
Treasury Index, a gauge of the Treasury market's
performance, was up nearly 7%. 
    The yield on the U.S. 10-year note dipped to
1.911% from 1.917% late on Friday, while U.S. 30-year bond
yields slipped to 2.337% from 2.346% on Friday.
    Yields edged higher after data showed U.S. new home sales
rebounded 1.3% to a seasonally adjusted annual rate of 719,000
units last month, lifted by gains in activity in the Northeast
and West regions. October's sales pace was revised down to
710,000 units from the previously reported 733,000 units.
    On the short end of the curve, U.S. two-year yields were up
at 1.639%, from Friday's 1.629%.
    The yield curve flattened for a second straight session on
Monday, with the spread between the two-year and 10-year note
yields falling to 27 basis points. Ahead of the
year-end, market participants sought to unwind steepening trades
put on the last two weeks as the U.S.-China trade concerns eased
with a preliminary deal on the horizon.
      December 23 Monday 10:23 AM New York/1523 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             1.55         1.5817    0.003
 Six-month bills               1.5525       1.5905    0.015
 Two-year note                 99-188/256   1.6399    0.011
 Three-year note               99-226/256   1.6655    0.006
 Five-year note                98-238/256   1.7271    -0.002
 Seven-year note               98-152/256   1.8419    -0.002
 10-year note                  98-144/256   1.9101    -0.007
 30-year bond                  100-216/256  2.3356    -0.010
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         7.25         0.00    
 U.S. 3-year dollar swap         3.00         0.00    
 U.S. 5-year dollar swap        -0.25         0.25    
 U.S. 10-year dollar swap       -4.25         0.25    
 U.S. 30-year dollar swap      -29.00         0.00    
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Dan Grebler)
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