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Gertrude Chavez-Dreyfuss

Dollar slips ahead of widely expected Fed rate hike

Sep 25 2018

NEW YORK The dollar was slightly weaker on Tuesday ahead of a Federal Reserve meeting that is widely expected to end with an interest rate hike, as investors already have priced in two more rate increases this year and some in 2019, leaving little room for further currency gains.

FOREX-Dollar softer ahead of Fed rate decision; hike largely priced in

Sep 25 2018

* Praet says Draghi comments nothing new * Dollar quiet ahead of two-day Fed meeting; rate hike expected * Major currencies shrug off latest trade war tariffs * Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh (Recasts, adds comment, FX table, updates prices, changes byline, dateline; previous LONDON) By Gertrude Chavez-Dreyfuss NEW YORK, Sept 25 The dollar was weaker on Tuesday ahead of a Federal Reserve meeting that is widely expected to end with an interest rate hike, as investors already have priced in two more rate increases this year and some in 2019, leaving little room for further currency gains. The Fed kicks off its two-day meeting later in the session, with market participants focused on the U.S. central bank's view on the economy as well as its guidance on future tightening. The Fed already has raised rates twice in 2018. The dollar has benefited from a hawkish rate outlook all year, but has lost steam the last few weeks, as other economies such as the euro zone improved, keeping them closer to a shift to tighter monetary policy. Since mid-August, the dollar has declined 3.1 percent against a basket of currencies. "The U.S. dollar appears vulnerable heading into Wednesday's Fed, given extended speculative bullish positioning against most of the G10 currencies and considerable tightening already reflected in fed funds futures," said Eric Theoret, currency strategist at Scotiabank in Toronto. He added that a December hike was priced around 80 percent, with roughly 50 basis points of tightening reflected for 2019. In mid-morning trading, the dollar index was down 0.1 percent, at 94.051. The euro, on the other hand, rose despite a European Central Bank official downplaying on Tuesday its president Mario Draghi's comments a day earlier about "relatively vigorous" inflation. Some analysts said the euro was also supported by signs Italy's anti-establishment coalition is likely to reach a compromise over its 2019 budget. The euro was last up 0.4 percent at $1.1789. It had touched a 3-1/2 month high on Monday after Draghi expressed confidence in euro zone inflation and wage growth, before giving up most of those gains. But the ECB's chief economist Peter Praet said on Tuesday there was nothing new in Draghi's comments. The single currency managed to find strength. Most analysts have interpreted Draghi's speech as hawkish - euro zone money markets brought forward their expectations for a 10 basis point ECB rate hike to September from October 2019 - helping to underpin the single currency. Against the yen, however, the dollar was up slightly at 112.86 yen after minutes from the Japanese central bank's July policy meeting showed that a few board members said the Bank of Japan must consider more seriously the potential dangers of ultra-easy policy. Overall, the broader currency market was largely quiet on Tuesday as the latest round of tariffs in the U.S.-China trade conflict kept investors on edge. "There is a general lack of impulses. The market is not reacting (to the trade war) because we are not seeing any economic impact. The other big driver (of currencies) is usually monetary policy but the FOMC is going to be a non-event," Thu Lan Nguyen, a strategist at Commerzbank in Frankfurt said, referring to the Federal Open Market Committee. ======================================================== Currency bid prices at 10:19AM (1419 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1790 $1.1746 +0.37% -1.74% +1.1792 +1.1732 Dollar/Yen JPY= 112.8700 112.7900 +0.07% +0.17% +112.9600 +112.7500 Euro/Yen EURJPY= 133.06 132.51 +0.42% -1.57% +133.1000 +132.3800 Dollar/Swiss CHF= 0.9651 0.9646 +0.05% -0.94% +0.9671 +0.9642 Sterling/Dollar GBP= 1.3161 1.3119 +0.32% -2.60% +1.3171 +1.3096 Dollar/Canadian CAD= 1.2949 1.2955 -0.05% +2.96% +1.2972 +1.2936 Australian/Doll AUD= 0.7255 0.7252 +0.04% -7.00% +0.7263 +0.7237 ar Euro/Swiss EURCHF= 1.1377 1.1334 +0.38% -2.67% +1.1380 +1.1327 Euro/Sterling EURGBP= 0.8956 0.8952 +0.04% +0.82% +0.8975 +0.8939 NZ NZD= 0.6652 0.6643 +0.14% -6.12% +0.6658 +0.6631 Dollar/Dollar Dollar/Norway NOK= 8.1095 8.1402 -0.38% -1.18% +8.1509 +8.1086 Euro/Norway EURNOK= 9.5614 9.5629 -0.02% -2.92% +9.5787 +9.5558 Dollar/Sweden SEK= 8.7940 8.7977 +0.32% +7.22% +8.8071 +8.7611 Euro/Sweden EURSEK= 10.3703 10.3369 +0.32% +5.40% +10.3717 +10.3118 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Tommy Wilkes in London; Editing by Andrea Ricci)

Euro climbs to more than three-month high on Draghi's comments

Sep 24 2018

NEW YORK The euro rose to a more than a three-month high against the dollar on Monday after European Central Bank chief Mario Draghi said he sees a vigorous pickup in euro zone inflation, backing moves toward unwinding an ECB asset purchase program meant to stimulate the economy.

FOREX-Euro rises to more than 3-month high on Draghi's comments

Sep 24 2018

* Investors expect rate hike from the Fed this week * ECB's Draghi sees vigorous pickup in inflation * Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh (Adds reports on U.S. Department of Justice official, updates prices, FX table) By Gertrude Chavez-Dreyfuss NEW YORK, Sept 24 The euro rose to more than a three-month high against the dollar on Monday after European Central Bank chief Mario Draghi said he sees a vigorous pickup in euro zone inflation, backing moves toward unwinding an ECB asset purchase program meant to stimulate the economy. The single currency has been on an uptrend the last few weeks, bolstered by generally solid European economic data. Over the last 10 days, the euro has risen 2.5 percent versus the greenback. The dollar, meanwhile, was little changed to slightly higher against the yen, as investors searched for fresh clues to extend a multi-month rally in the greenback before a widely-expected interest rate hike by the U.S. Federal Reserve this week. The dollar briefly dipped against the yen after some media said U.S. Deputy Attorney General Rod Rosenstein was headed to the White House amid reports he had offered to resign in anticipation of being fired by President Donald Trump. Other media, however, reported that Rosenstein, who oversees the special counsel investigation into Russia's role in the 2016 U.S. presidential election, had not offered to resign. With the Fed decision a few days away, markets were jolted by Draghi's hawkish comments on inflation and wage growth even though he affirmed the ECB's pledge to keep rates at their current, rock-bottom level "through the summer" of next year. John Doyle, director of markets at Tempus Consulting in Washington, said Draghi's remarks reinforced the view that other central banks are catching up with the Fed in terms of tightening monetary policy. "The idea of divergence between the Fed tightening and other central banks either on hold or cutting rates is not there to support the dollar anymore," Doyle said. In midday trading, the euro rose 0.2 percent against the dollar to $1.1771. It rose to as high as $1.1815, a 3-1/2-month peak. The euro earlier was also boosted after German Chancellor Angela Merkel's coalition government resolved a dispute over the country's scandal-tainted spy chief on Sunday, ending a threat to the six-month-old administration. Against the yen, the dollar was up 0.1 percent at 112.65 yen ahead of this week's Fed meeting. With the market forecasting a rate hike this week, another in December and two more next year - roughly in line with Fed policymakers' projections - analysts said only unexpectedly strong data would change those bets. "Dollar direction could boil down to how many rate hikes the Fed pencils in over the coming year," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "The Fed could increase its forecast for 2019 rate hikes from three to four with inflation showing signs of pushing above its 2 percent goal, a hawkish scenario that would likely be positive for the dollar," he added. Earlier the dollar snapped a two-week losing streak as the weekend brought global trade tensions back into the spotlight after Beijing released a white paper on its trade dispute with the United States, saying it would seek a reasonable outcome, while also describing U.S. tactics as "bullying." The dollar index was last down 0.1 percent at 94.138, mainly weighed down by the euro's gains. ======================================================== Currency bid prices at 11:55AM (1555 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1770 $1.1749 +0.18% -1.88% +1.1815 +1.1724 Dollar/Yen JPY= 112.6200 112.5600 +0.05% -0.04% +112.7000 +112.2800 Euro/Yen EURJPY= 132.56 132.29 +0.20% -1.94% +133.0600 +131.9100 Dollar/Swiss CHF= 0.9621 0.9584 +0.39% -1.25% +0.9625 +0.9581 Sterling/Dollar GBP= 1.3127 1.3076 +0.39% -2.85% +1.3166 +1.3057 Dollar/Canadian CAD= 1.2932 1.2913 +0.15% +2.82% +1.2949 +1.2909 Australian/Doll AUD= 0.7261 0.7289 -0.38% -6.92% +0.7281 +0.7250 ar Euro/Swiss EURCHF= 1.1324 1.1261 +0.56% -3.12% +1.1329 +1.1254 Euro/Sterling EURGBP= 0.8963 0.8981 -0.20% +0.90% +0.8996 +0.8936 NZ NZD= 0.6649 0.6684 -0.52% -6.17% +0.6687 +0.6643 Dollar/Dollar Dollar/Norway NOK= 8.1320 8.1471 -0.19% -0.91% +8.1613 +8.1176 Euro/Norway EURNOK= 9.5733 9.5732 +0.00% -2.80% +9.6055 +9.5566 Dollar/Sweden SEK= 8.7960 8.7852 +0.28% +7.25% +8.8166 +8.7537 Euro/Sweden EURSEK= 10.3540 10.3250 +0.28% +5.23% +10.3765 +10.3050 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Saikat Chatterjee in London Editing by Paul Simao)

FOREX-Euro rises to more than 3-month high on Draghi's inflation comments

Sep 24 2018

* Investors expect rate hike from the Fed this week * ECB's Draghi sees vigorous pickup in inflation * Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh (Recasts, updates prices, adds comment, changes byline, dateline; previous LONDON) By Gertrude Chavez-Dreyfuss NEW YORK, Sept 24 The euro rose to more than a three-month high against the dollar on Monday after European Central Bank chief Mario Draghi said he sees a vigorous pickup in euro zone inflation, backing moves toward unwinding an ECB asset purchase program meant to stimulate the economy. The single currency has been on an uptrend the last few weeks, bolstered by generally solid European economic data. Over the last 10 days, the euro has risen 2.5 percent versus the greenback. The dollar, meanwhile, was little changed against the yen as investors searched for fresh clues to extend a multi-month rally in the greenback before a widely-expected interest rate hike by the U.S. Federal Reserve this week. But with the Fed decision a few days away, markets were jolted by Draghi's hawkish comments on inflation and wage growth even though he affirmed the ECB's pledge to keep rates at their current, rock-bottom level "through the summer" of next year. John Doyle, director of markets at Tempus Consulting in Washington, said Draghi's remarks reinforced the view that other central banks are catching up with the Fed in terms of tightening monetary policy. "The idea of divergence between the Fed tightening and other central banks either on hold or cutting rates is not there to support the dollar anymore," Doyle said. In late morning trading, the euro rose 0.3 percent against the dollar to $1.1783. It rose to as high as $1.1815, a 3-1/2-month peak. The euro earlier was also boosted after German Chancellor Angela Merkel's coalition government resolved a dispute over the country's scandal-tainted spy chief on Sunday, ending a threat to the six-month-old administration. Against the yen, the dollar was flat at 112.56 yen ahead of this week's Fed meeting. With the market forecasting a rate hike this week, another in December and two more next year - roughly in line with Fed policymakers' projections - analysts said only unexpectedly strong data would change those bets. "Dollar direction could boil down to how many rate hikes the Fed pencils in over the coming year," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "The Fed could increase its forecast for 2019 rate hikes from three to four with inflation showing signs of pushing above its 2 percent goal, a hawkish scenario that would likely be positive for the dollar," he added. Earlier the dollar snapped a two-week losing streak as the weekend brought global trade tensions back into the spotlight after Beijing released a white paper on its trade dispute with the United States, saying it would seek a reasonable outcome, while also describing U.S. tactics as "bullying." The dollar index was last down 0.2 percent at 94.027, mainly weighed down by the euro's gains. ======================================================== Currency bid prices at 10:45AM (1445 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1775 $1.1749 +0.22% -1.84% +1.1815 +1.1724 Dollar/Yen JPY= 112.4800 112.5600 -0.07% -0.17% +112.7000 +112.2800 Euro/Yen EURJPY= 132.46 132.29 +0.13% -2.01% +133.0600 +131.9100 Dollar/Swiss CHF= 0.9599 0.9584 +0.16% -1.48% +0.9608 +0.9581 Sterling/Dollar GBP= 1.3130 1.3076 +0.41% -2.82% +1.3166 +1.3057 Dollar/Canadian CAD= 1.2926 1.2913 +0.10% +2.77% +1.2949 +1.2909 Australian/Doll AUD= 0.7258 0.7289 -0.43% -6.96% +0.7281 +0.7250 ar Euro/Swiss EURCHF= 1.1308 1.1261 +0.42% -3.26% +1.1324 +1.1254 Euro/Sterling EURGBP= 0.8968 0.8981 -0.14% +0.96% +0.8996 +0.8936 NZ NZD= 0.6657 0.6684 -0.40% -6.05% +0.6687 +0.6654 Dollar/Dollar Dollar/Norway NOK= 8.1389 8.1471 -0.10% -0.82% +8.1613 +8.1176 Euro/Norway EURNOK= 9.5858 9.5732 +0.13% -2.67% +9.6055 +9.5566 Dollar/Sweden SEK= 8.7982 8.7852 +0.35% +7.27% +8.8166 +8.7537 Euro/Sweden EURSEK= 10.3616 10.3250 +0.35% +5.31% +10.3765 +10.3050 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Saikat Chatterjee in London Editing by Paul Simao)

UPDATE 1-Speculators raise net long U.S. dollar bets in latest week-CFTC, Reuters

Sep 21 2018

(Adds details, bitcoin futures, comment, table, byline) By Gertrude Chavez-Dreyfuss NEW YORK, Sept 21 Speculators' net long bets on the U.S. dollar rose after declining for three straight weeks, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. The value of the net long dollar position rose to $22.98 billion in the week ended Sept. 18 from $19.16 billion the previous week. Speculators have been net long dollars for 14 straight weeks. U.S. dollar positioning was derived from net contracts of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars. In a wider measure of dollar positioning that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the U.S. dollar posted a net long position of $24.78 billion in the week ended Sept. 18, from $20.79 billion a week earlier. Analysts said underlying sentiment has cooled toward the dollar given easing trade war concerns, which curbed appetite for safe havens. For instance, while China and the United States continued to wrangle over trade, the modest tariff increases were considered less severe than expected and therefore likely to have only a muted impact on global growth, analysts said. Since mid-August, the dollar index has fallen 3.3 percent. But a more hawkish outlook from the Federal Reserve next week could further support the dollar in the near term. August's U.S. nonfarm payrolls data showed a spike in wages last month, boosting the inflation outlook and further underpinning rate hike expectations. In other contracts, concerns about negotiations over Britain's exit from the European Union have pushed sterling net shorts to -79,258 contracts, the largest since May 2017. On Friday, British Prime Minister Theresa May said negotiations with the EU had hit an impasse. "The two sides remain far apart, meaning the chances of an agreement being reached in October and finalized in November seem pretty slim," said Thomas Pugh, UK economist at Capital Economics in London. "For now, we see no reason to change our assumption that a deal will only be secured at the eleventh hour, underpinning our view that sterling is likely to drop to $1.25 by the end of the year," he added. In the cryptocurrency market, speculators' net short position on bitcoin Cboe futures rose to -1,318 contracts in the latest week, after hitting a record low of -1,239 contracts the previous week, data showed. Bitcoin on Friday rose 4.2 percent to $6,757.28 on the Bitstamp platform. It cleared the $7,000 hurdle in late August. Michael Novogratz, former macro hedge fund manager and founder of cryptocurrency asset management firm Galaxy Digital Capital Management, said at a Yahoo Finance summit that cryptocurrency prices have hit a bottom and bitcoin is due to bounce back. Japanese Yen (Contracts of 12,500,000 yen) $7.093 billion 18 Sep 2018 Prior week week Long 49,752 48,057 Short 113,507 101,943 Net -63,755 -53,886 EURO (Contracts of 125,000 euros) $-0.243 billion 18 Sep 2018 Prior week week Long 166,468 164,639 Short 164,802 153,469 Net 1,666 11,170 POUND STERLING (Contracts of 62,500 pounds sterling) $6.513 billion 18 Sep 2018 Prior week week Long 32,856 65,982 Short 112,114 127,161 Net -79,258 -61,179 SWISS FRANC (Contracts of 125,000 Swiss francs) $2.39 billion 18 Sep 2018 Prior week week Long 9,875 7,676 Short 28,313 43,026 Net -18,438 -35,350 CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars) $2.321 billion 18 Sep 2018 Prior week week Long 25,979 30,506 Short 56,090 57,448 Net -30,111 -26,942 AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars) $4.908 billion 18 Sep 2018 Prior week week Long 26,231 48,230 Short 94,234 92,542 Net -68,003 -44,312 MEXICAN PESO (Contracts of 500,000 pesos) $-1.077 billion 18 Sep 2018 Prior week week Long 112,234 101,282 Short 71,721 86,746 Net 40,513 14,536 NEW ZEALAND DOLLAR (Contracts of 100,000 New Zealand dollars) $2.105 billion 18 Sep 2018 Prior week week Long 11,021 19,408 Short 43,010 42,055 Net -31,989 -22,647 (Reporting by Gertrude Chavez-Dreyfuss Editing by Susan Thomas and James Dalgleish)

TREASURIES-U.S. yields dip, tracking Europe, as Brexit talks stumble

Sep 21 2018

* U.S. 2-year yield hits 10-year high * Focus on FOMC next week * Brexit unresolved as UK, EU at impasse (Adds comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Sept 21 U.S. long-dated Treasury yields slipped on Friday, in tandem with those in Europe, as negotiations over Britain's exit from the European Union appeared to stall. U.S. 2-year yields, however, remained unaffected by global factors as they hit a fresh 10-year high in the run-up to an expected rate increase at next week's Federal Reserve monetary policy meeting. Yields have been on an uptrend the last few weeks after data showed U.S. wages spiking last month, elevating concerns about inflation, and boosting expectations the Fed could raise rates a few more times this year and in 2019. Britain's exit from the European Union, known as Brexit, has caught investors' attention, after British Prime Minister Theresa May on Friday delivered a critical assessment of negotiations with the EU. May said she will not break up her country or disrespect the result of the referendum that voted to leave the European grouping, noting that no deal is better than a bad deal. "If the whole Brexit goes to hell, that would be bullish for Treasuries and could precipitate a whole risk-off trade," said Jerry Paul, senior vice president and fixed income portfolio manager at ICON Advisers in Denver. The British 10-year government bond yield fell to 1.548 percent from Thursday's 1.586 percent after May's comments, while Germany's 10-year yield was lower at 0.461 percent, from 0.479 percent the previous session. Treasury yields fell in sympathy, with U.S. 10-year yields dipping to 3.068 percent in afternoon trading, from 3.078 percent late on Thursday. U.S. 30-year yields were at 3.204 percent, down from Thursday's 3.214 percent. U.S. 2-year yields, meanwhile, were at 2.808 percent , unchanged from Thursday's levels, after earlier touching a more than 10-year high at 2.825 percent. The Brexit situation has become a distraction to a Treasury market that is bracing for further rate increases from the Fed, which meets next week. "A 25-basis point hike has been priced in for months, so no surprises there," said Action Economics in its blog. "Of more importance will be the dot plot and forward guidance, both of which are likely to support a continuation of gradual policy normalization." Fed officials' median projection on the number of rate increases is commonly referred to as its dot-plot. Action Economics said based on growth and inflation numbers, the dot plot median should still hold at four rate hikes this year and three in 2019. Fed funds futures are pricing in a roughly 80 percent chance for a tightening at the December meeting, with implied rates showing a 50-50 probability of another hike as soon as the March 2019 Fed meeting, the research firm said. Next week is heavy on U.S. economic data, which along with the Fed's rate decision, could prove to be crucial in determining the path for interest rates this year and in 2019. September 21 Friday 3:33PM New York / 1933 GMT Price Current Net Yield % Change (bps) Three-month bills 2.1325 2.1733 0.004 Six-month bills 2.3175 2.3769 0.005 Two-year note 99-170/256 2.8041 -0.004 Three-year note 99-154/256 2.8906 -0.008 Five-year note 99-20/256 2.9519 -0.010 Seven-year note 98-72/256 3.0265 -0.013 10-year note 98-96/256 3.0665 -0.012 30-year bond 96-20/256 3.2048 -0.009 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 17.50 -0.50 spread U.S. 3-year dollar swap 15.25 -0.25 spread U.S. 5-year dollar swap 12.25 0.00 spread U.S. 10-year dollar swap 6.00 -0.25 spread U.S. 30-year dollar swap -6.75 -0.25 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Dan Grebler and Susan Thomas)

TREASURIES-U.S. yields fall, in line with Europe, as Brexit worries weigh

Sep 21 2018

By Gertrude Chavez-Dreyfuss NEW YORK, Sept 21 U.S. long-dated Treasury yields slipped on Friday, in tandem with those in Europe, as Brexit negotiations stalled between the UK and the European Union. U.S. 2-year yields, however, remained unaffected by global factors as they hit a fresh 10-year high in the run-up to an expected rate increase at next week's Federal Reserve monetary policy meeting. Brexit has caught investors' attention, after British Prime Minister Theresa May on Friday delivered a critical assessment of negotiations with the EU. May said she will not break up her country or disrespect the result of the referendum that voted to leave the European grouping, noting that no deal is better than a bad deal. "If the whole Brexit goes to hell, that would be bullish for Treasuries and could precipitate a whole risk-off trade," said Jerry Paul, senior vice president and fixed income portfolio manager at ICON Advisers in Denver. The British 10-year government bond yield fell to 1.545 percent from Thursday's 1.586 percent following May's comments, while Germany's 10-year yield was lower at 0.456 percent, from 0.479 percent the previous session. Treasury yields fell in sympathy, with U.S. 10-year yields sliding to 3.066 percent in late morning trading, from 3.078 percent late on Thursday. U.S. 30-year yields were at 3.202 percent, down from Thursday's 3.214 percent. U.S. 2-year yields, meanwhile, were at 2.812 percent , up from 2.808 percent on Thursday, after earlier touching a more than 10-year high at 2.825 percent. The Brexit situation has become a distraction to a Treasury market that is bracing for further rate increases from the Fed. "The general trend is for short rates to go higher and I tend to believe that the yield curve will continue to flatten," Paul said. "We could go higher on the 10-year over the duration of 12 months, maybe 3.25 percent, maybe as high as 3.5 percent." That said, Paul has started to buy U.S. Treasuries, with the yield above 3 percent on U.S. 10-year notes. "I don't think there's a big risk for me if the rate falls to 2.5 percent, but you never know. We're pretty cautious on making big interest rate bets," he added. Next week is heavy on U.S. economic data, which along with the Fed's rate decision, could prove to be crucial in determining the path for interest rates this year and in 2019. The market will look forward to release of the final U.S. gross domestic product number for the second quarter, as well as readings on confidence, consumption, housing, advance trade and durable orders. September 21 Friday 10:43AM New York / 1443 GMT Price Current Net Yield % Change (bps) Three-month bills 2.1325 2.1733 0.004 Six-month bills 2.315 2.3743 0.002 Two-year note 99-166/256 2.8125 0.004 Three-year note 99-148/256 2.8989 0.000 Five-year note 99-16/256 2.9554 -0.007 Seven-year note 98-68/256 3.029 -0.010 10-year note 98-96/256 3.0665 -0.012 30-year bond 96-24/256 3.204 -0.010 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 17.50 -0.50 spread U.S. 3-year dollar swap 15.25 -0.25 spread U.S. 5-year dollar swap 12.25 0.00 spread U.S. 10-year dollar swap 6.25 0.00 spread U.S. 30-year dollar swap -6.25 0.25 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Dan Grebler)

TREASURIES-U.S. long-term yields decline on trade, Brexit uncertainty

Sep 20 2018

* China says U.S. should correct its behavior on trade * Brexit tension heats up, but deal seen in October * Market shrugs off upbeat U.S. data (Adds comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Sept 20 U.S. long-dated Treasury yields fell on Thursday, as persistent U.S.-China trade tensions and uncertainty over Brexit spurred investors to seek the safety of government bonds. Upbeat U.S. economic data briefly pushed yields higher, but investors were mostly focused on the conflict between the world's two largest economies. China said on Thursday it hoped the United States would show sincerity and take steps to correct its behavior after both countries slapped new tariffs on each other's goods this week in an escalating trade war. Some analysts were concerned China would resort to other non-trade measures to retaliate, such as moving away from buying U.S. Treasuries. "I don't know if there is any credible reason to believe that at this time," said Lou Brien, market strategist, at DRW Trading in Chicago. "But you get the market acting nervous, even though I am not a big believer that China would back away from Treasuries, but you never know." China remains the largest non-U.S. holder of Treasuries, but in July its holdings of U.S. government bonds declined to $1.171 trillion. China's July outflow of Treasuries was the third in the last four months. Uncertainty on Brexit also weighed on U.S. yields, analysts said, citing testy negotiations between Britain and the European Union. British Prime Minister Theresa May said on Thursday the UK was prepared to leave the EU without an agreement unless there was a proposal it deemed acceptable. EU leaders, on the other hand, said they would push for a Brexit deal next month but warned the UK leader that if she did not give ground on trade and the Irish border by November, the group was ready to cope with Britain crashing out. In afternoon trading, U.S. 10-year yields were last at 3.073 percent, down from 3.083 percent late on Wednesday. Capital Economics market economist Oliver Jones said U.S. Treasury yields might be nearing a peak, which the firm forecasts would be 3.25 percent on the 10-year note. "We think the U.S. economy will slow sharply in 2019, as the fiscal stimulus fades and Fed (Federal Reserve) tightening bites," said Jones. "In our view, this will bring the Fed's tightening cycle to an end in the middle of next year and raise the possibility of rate cuts further ahead." U.S. 30-year yields were at 3.208 percent, down from Wednesday's 3.237 percent. U.S. 2-year yields were unchanged at 2.8076 percent , from levels on Wednesday. Data showing better-than-expected U.S. jobless claims and a higher Philadelphia Federal Reserve manufacturing index briefly lifted yields earlier in the session. September 20 Thursday 3:25 PM New York/1925 GMT Price Current Net Yield % Change (bps) Three-month bills 2.1275 2.1686 0.003 Six-month bills 2.305 2.3644 -0.001 Two-year note 99-168/256 2.8076 0.001 Three-year note 99-150/256 2.8958 0.000 Five-year note 99-12/256 2.9585 -0.002 Seven-year note 98-60/256 3.0338 -0.006 10-year note 98-80/256 3.0738 -0.009 30-year bond 96 3.209 -0.028 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 18.50 1.00 spread U.S. 3-year dollar swap 15.50 0.75 spread U.S. 5-year dollar swap 12.50 1.00 spread U.S. 10-year dollar swap 6.50 1.00 spread U.S. 30-year dollar swap -6.00 1.75 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Richard Chang)

TREASURIES-U.S. long-term yields drift lower on trade, Brexit uncertainty

Sep 20 2018

By Gertrude Chavez-Dreyfuss NEW YORK, Sept 20 U.S. long-dated Treasury yields fell on Thursday, as persistent trade tension between China and the United States as well as Brexit uncertainty spurred investors to seek the safety of government bonds. Upbeat U.S. economic data on Thursday pushed yields a little higher, but that was short-lived, with the market mostly focused on the ongoing trade conflict between the two largest economies in the world. China's commerce ministry said on Thursday it hopes the United States will show sincerity and take steps to correct its behavior, after both countries slapped new tariffs on each other's goods this week in an escalating trade war. Some analysts were concerned that China will resort to other non-trade measures to fight back against the United States. "We have been moving higher in yields ever since the last jobs report showed higher wages and now with the increased tension between the U.S. and China, there are some concerns that the Chinese would back away from owning Treasuries," said Lou Brien, market strategist, at DRW Trading in Chicago. China remains the largest non-U.S. holder of Treasuries, but in July its holdings of U.S. government bonds declined to $1.171 trillion. China's July outflow of Treasuries was the third in the past four months. Uncertainty on Brexit was also a factor that weighed on U.S. Treasury yields, analysts said, although British Prime Minister Theresa May said on Thursday she believed there was a growing desire to sit down and reach a deal. But she also said the UK was preparing to leave the European Union without an agreement if there were no proposal that it deemed acceptable. In morning trading, U.S. 10-year yields were last at 3.066 percent, down from 3.083 percent late on Wednesday. U.S. 30-year yields were at 3.205 percent, from Wednesday's 3.237 percent. U.S. 2-year yields, meanwhile, were unchanged at 2.8076 percent, from levels on Wednesday. Data showing better-than-expected U.S. jobless claims and higher Philadelphia Federal Reserve manufacturing index lifted yields earlier in the session, but that was not sustained. September 20 Thursday 10:45AM New York / 1445 GMT Price Current Net Yield % Change (bps) Three-month bills 2.1275 2.1686 0.003 Six-month bills 2.3125 2.3722 0.007 Two-year note 99-166/256 2.8118 0.005 Three-year note 99-148/256 2.8985 0.003 Five-year note 99-14/256 2.9568 -0.003 Seven-year note 98-64/256 3.0313 -0.009 10-year note 98-88/256 3.0701 -0.013 30-year bond 95-248/256 3.2106 -0.026 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 17.50 0.00 spread U.S. 3-year dollar swap 15.25 0.50 spread U.S. 5-year dollar swap 12.00 0.50 spread U.S. 10-year dollar swap 6.25 0.75 spread U.S. 30-year dollar swap -6.50 1.25 spread (Reporting by Gertrude Chavez-Dreyfuss)

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