December 6, 2017 / 9:12 PM / 10 months ago

TREASURIES-Yields fall after U.S. data, geopolitical risk

    * U.S. ADP jobs data comes in slightly higher than forecast
    * U.S. productivity decline weighs on Treasuries
    * Geopolitical tension in Israel also a market driver

 (Updates prices, table, adds comment)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Dec 6 (Reuters) - U.S. Treasury yields fell across
the board on Wednesday as risk appetite slid after a sell-off in
some foreign equity markets, with further pressure coming from a
batch of largely underwhelming U.S. economic data and
geopolitical risks. 
    U.S. President Donald Trump's recognition of Jerusalem as
Israel's capital touched off a storm of protest from world
leaders, helping boost Treasury prices, analysts said.

    "Headlines on where the U.S. Embassy should be, which is
always a big deal, tend to remind people that the Middle East 
has never been settled, and that has helped put a bid on
Treasury prices," said Jim Vogel, interest rates strategist at
FTN Financial in Memphis, Tennessee.
    Wall Street shares rose on Wednesday, led by a recovery in
technology stocks that had been battered in the previous
sessions. But U.S. equity gains failed to lift yields as well,
as investors pondered non-market factors. 
    A decline in  U.S. unit labor costs in the second and third
quarters of this year, suggesting benign inflation pressures,
also weighed on Treasury yields, analysts said.
    The ADP National Employment Report, which shows
private-sector hiring, came out with a slightly higher than
expected number of jobs created last month, but analysts have
such little faith in the data that it was largely shrugged off. 
    The ADP report showed U.S. private employers created 190,000
jobs in November, down sharply from the month before and roughly
in line with economists' expectations of a gain of 185,000.
    "ADP hasn't had a very good track record recently of
predicting private nonfarm payrolls, overestimating half of the
time and underestimating the other half," said Ian Lyngen, head
of U.S. rates strategy at BMO Capital Markets in New York.
    The ADP figures came ahead of the U.S. Labor Department's
more comprehensive nonfarm payrolls report on Friday, which
includes both public- and private-sector employment. 
    In late trading, U.S. benchmark 10-year yields were down at
2.329 percent, from 2.356 percent late on Tuesday,
while the two-year slid to 1.806 percent, from Tuesday's 1.826
    U.S. 30-year yields, meanwhile, dropped to three-month lows
and were last at 2.719 percent, down from 2.732
percent on Tuesday.
    "This market is like a junkie, waiting for the next fix,"
said Bruno Braizinha, interest rates strategist at Societe
Generale in New York.
    "All the good news seems to have been priced in: the U.S.
tax reform, the Federal Reserve hike next month and next year.
So now the market is waiting for the next positive thing." 
    December 6 Wednesday 4:01PM New York / 2101 GMT
 US T BONDS MAR8               154-2/32     0-11/32   
 10YR TNotes MAR8              124-144/256  0-56/256  
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             1.2725       1.2943    -0.021
 Six-month bills               1.43         1.4604    -0.024
 Two-year note                 99-228/256   1.8064    -0.020
 Three-year note               99-136/256   1.9146    -0.021
 Five-year note                99-110/256   2.1212    -0.030
 Seven-year note               99-40/256    2.2563    -0.027
 10-year note                  99-76/256    2.3296    -0.026
 30-year bond                  100-156/256  2.7201    -0.012
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        17.50         0.25    
 U.S. 3-year dollar swap        16.25        -0.25    
 U.S. 5-year dollar swap         5.75         0.50    
 U.S. 10-year dollar swap        1.75         0.50    
 U.S. 30-year dollar swap      -20.00         0.25    
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Jonathan
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