November 27, 2019 / 5:58 PM / 18 days ago

TREASURIES-Yields rise on strong capital goods orders

 (Adds inflation data, auction results, updates prices)
    * Capital goods orders beat expectations in October
    * Treasury sells $32 bln seven-year notes to strong demand
    * Treasury market closed on Thursday

    By Karen Brettell
    NEW YORK, Nov 27 (Reuters) - U.S. Treasury yields rose on
Wednesday after data showed that new orders for key U.S.-made
capital goods increased by the most in nine months in October,
boosting confidence that the U.S. economy is solid.
    The Commerce Department said on Wednesday orders for
non-defense capital goods excluding aircraft, a closely watched
proxy for business spending plans, surged 1.2% last month, the
largest gain since January. 
    These so-called core capital goods orders were boosted by
increased demand for machinery, computers and electronic
products, and fabricated metals.
    “The numbers certainly surprised to the upside ... there’s
been a lot of concern about weak investment,” said Gennadiy
Goldberg, an interest rate strategist at TD Securities in New
York.
    However, “the problem is this is one of the most volatile
data series we have in the main U.S. data release calendar, so
it is difficult to read into it,” Goldberg said.
    Bonds pared price losses after data showed that inflation
remained benign in October.
    Excluding the volatile food and energy components, the PCE
price index edged up 0.1% last month after being unchanged in
September. That lowered the annual increase in the so-called
core PCE price index to 1.6% in October from 1.7% in September.

    Risk appetite also improved after U.S. President Trump said
on Tuesday that the United States and China are close to
agreement on the first phase of a trade deal, reducing demand
for safe haven U.S. government bonds.
    Benchmark 10-year note yields were last at 
1.760%, up from 1.740% late Tuesday.
    The Treasury Department sold $32 billion in seven-year notes
on Wednesday to strong demand, the final sale of $113 billion in
coupon-bearing supply this week.
    A $40 billion sale of two-year notes on Monday and a $41
billion sale of five-year notes on Tuesday were marked by solid
demand.
    The bond market will be closed on Thursday for the
Thanksgiving Day holiday.
    
      November 27 Wednesday 12:48PM New York / 1748 GMT
                               Price        Current   Net Change
                                            Yield %   (bps)
 Three-month bills             1.59         1.6185    0.013
 Six-month bills               1.5875       1.6269    0.008
 Two-year note                 99-197/256   1.6179    0.032
 Three-year note               100-12/256   1.6086    0.030
 Five-year note                99-112/256   1.6177    0.030
 Seven-year note               99-112/256   1.7115    0.029
 10-year note                  99-232/256   1.7603    0.020
 30-year bond                  104-28/256   2.1873    0.009
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         0.00        -0.75    
 spread                                               
 U.S. 3-year dollar swap        -4.00        -0.50    
 spread                                               
 U.S. 5-year dollar swap        -5.25         0.75    
 spread                                               
 U.S. 10-year dollar swap       -8.50         0.50    
 spread                                               
 U.S. 30-year dollar swap      -34.50         0.75    
 spread                                               
 

  
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