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Karen Brettell

TREASURIES-U.S. yields fall as Fed's Williams argues for early stimulus

2:51pm EDT

(Recasts with comments by Fed's Williams; updates prices) * Philly Fed index highest since July 2018 * Euro, bonds fall on report ECB may change inflation goal By Karen Brettell NEW YORK, July 18 U.S. Treasury yields declined on Thursday after a Federal Reserve official said policymakers need to add stimulus early to address too-low inflation when interest rates are near zero and said they cannot wait for economic disaster to unfold. The remarks by the president of the New York Fed, John Williams, that policymakers cannot afford to keep their "powder dry" and wait for potential economic problems to materialize in those circumstances come less than two weeks before the Fed's next policy meeting. In recent weeks, Fed policymakers have identified a host of concerns they think could end what is now the longest U.S. economic expansion on record. Chief among those concerns include the prolonged U.S.-China trade war, which is denting business confidence, a global manufacturing slowdown and inflation below the Fed's target of 2% a year. Benchmark 10-year notes were last up 7/32 to yield 2.038%, down from 2.061% late Wednesday. The U.S. central bank is seen as certain to cut rates on concerns about global growth when it meets on July 30-31. “We haven’t really seen global growth pick up in a material way, trade volumes are still quite low, there are certainly dark clouds on the horizon and those have not gone away,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. Interest rate futures traders are now pricing an equal probability of the Fed's cutting its rate by 25 basis points or 50 basis points, according to the CME Group’s FedWatch tool. Yields rose earlier on Thursday after data showed that a Philadelphia manufacturing index rebounded strongly in July, adding to recent data that shows an improving U.S. economy. The Philadelphia Fed said factory activity in the mid-Atlantic region reached its highest level in a year, following other recent surveys on manufacturing that have suggested the struggling sector was stabilizing. Yields have risen from more than 2-1/2-year lows reached earlier this month, and the yield curve has steepened as jobs, inflation and retail sales data show that the U.S. economy is improving. The yield rise has been capped, however, by dovish global central bank policy. The euro and government bond yields across the single currency bloc fell on Thursday, following a report by Bloomberg News that European Central Bank staff are studying a potential change to the bank's inflation goal of "near 2%." The report quoted sources as saying ECB staff were studying the bank's approach informally, including whether a more flexible target might be more appropriate in the post-crisis era - potentially allowing inflation to stay higher for a certain time. (Reporting by Karen Brettell Editing by Leslie Adler) )

TREASURIES-Yields rise after mid-Atlantic factory activity rebounds

9:31am EDT

* Philly Fed index highest since July 2018 * Report that ECB may change inflation goal By Karen Brettell NEW YORK, July 18 U.S. Treasury yields rose on Thursday after a Philadelphia manufacturing index rebounded strongly in July, adding to recent data that shows an improving U.S. economy. The Philadelphia Fed said that its index of business conditions rose to the highest level in a year. “The Philly Fed I think was the impetus for the move higher in yields,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. "There were some pretty solid underlying fundamentals as well, so it does suggest that maybe we are seeing a little bit of basing in some of the manufacturing indices.” Benchmark 10-year notes fell 3/32 in price to yield 2.069%, up from 2.061% late Wednesday. Yields have risen from more than 2-1/2-year lows reached earlier this month and the yield curve has steepened as jobs, inflation and retail sales data show that the U.S. economy is improving. The yield rise has been capped, however, by dovish global central bank policy as the U.S.-China trade war weighs on the international economic outlook. “We haven’t really seen global growth pick up in a material way, trade volumes are still quite low, there are certainly dark clouds on the horizon and those have not gone away,” Goldberg said. The Federal Reserve is seen as certain to cut rates when it meets later this month. Interest rate futures traders are pricing in a 65% chance of a 25 basis point cut this month and a 35% likelihood of a 50 basis point cut, according to the CME Group’s FedWatch tool. The euro and government bond yields across the single currency bloc fell on Thursday, following a report by Bloomberg News that European Central Bank staff are studying a potential change to the bank's inflation goal of 'near 2%'. The report quoted sources as saying ECB staff were studying the bank's approach informally, including whether a more flexible target might be more appropriate in the post-crisis era - potentially allowing inflation to stay higher for a certain time. (Editing by Susan Thomas) )

TREASURIES-Yields fall on U.S.-China trade concerns, weak housing

Jul 17 2019

(Adds Beige Book, updates prices) * Housing permits fall to two-year low in June * Expected Fed rate cut caps U.S. yield increases * Fed says economy growing at a "modest" rate By Karen Brettell NEW YORK, July 17 U.S. Treasury yields fell on Wednesday as concerns about the U.S.-China trade war boosted demand for safe haven debt and after data showed weakness in the U.S. housing market. U.S. President Donald Trump said on Tuesday the United States still had a long way to go to conclude a trade deal with China but could impose tariffs on an additional $325 billion worth of Chinese goods if it needed to do so. The United States could also face Chinese sanctions for not fully complying with a World Trade Organization ruling, WTO appeals judges said on Tuesday. The Federal Reserve is seen as certain to cut rates when it meets later this month, as the U.S.-China trade war weighs on the global economic outlook. U.S. data on Wednesday showed homebuilding fell for a second straight month in June and permits dropped to a two-year low despite lower mortgage rates. Building permits tumbled 6.1% to a rate of 1.220 million units in June, the lowest since May 2017. "The housing starts were a little weaker but the building permits were definitely significantly weaker," said Justin Lederer, an interest rates strategist at Cantor Fitzgerald in New York. Benchmark 10-year notes gained 17/32 in price to yield 2.06%, down from 2.12% late on Tuesday. Yields have risen from more than 2-1/2 year lows reached earlier this month and the yield curve has steepened as recent data including jobs, inflation and retail sales data showed an improving U.S. economy. The Fed on Wednesday reported "modest" U.S. economic growth in recent weeks, with consumers continuing to spend, and a "generally positive" outlook overall even with disruptions from U.S. trade policy. The yield rise has been capped by dovish central bank policy globally. Strong demand for European government debt also boosts U.S. Treasuries. U.S. debt offers a significantly higher yield than comparable German government bonds, which traded at a yield of minus 0.29% on Wednesday. Interest rate futures traders are pricing in a 65% chance of a 25 basis point cut by the Fed this month and a 35% likelihood of a 50 basis point cut, according to the CME Group's FedWatch tool. (Editing by Susan Thomas and Richard Chang) )

TREASURIES-Yields fall on weak housing, U.S.-China trade concerns

Jul 17 2019

* Housing permits fall to two-year low in June * Expected Fed rate cut caps U.S. yield increases By Karen Brettell NEW YORK, July 17 U.S. Treasury yields fell on Wednesday after data showed weakness in the U.S. housing market and as concerns about the trade war between the United States and China boosted demand for safe haven debt. U.S. homebuilding fell for a second straight month in June and permits dropped to a two-year low, suggesting the housing market continued to struggle despite lower mortgage rates. Building permits tumbled 6.1% to a rate of 1.220 million units in June, the lowest level since May 2017. “The housing starts were a little weaker but the building permits were definitely significantly weaker,” said Justin Lederer, an interest rates strategist at Cantor Fitzgerald in New York. Benchmark 10-year notes were last up 9/32 in price to yield 2.09%, after falling as low as 2.08% after the housing data. Yields have risen from more than 2-1/2 year lows reached earlier this month and the yield curve has steepened as jobs, inflation and retail sales data show that the U.S. economy is improving. The move has been capped, however, with the Federal Reserve seen as certain to cut rates when it meets later this month as the U.S.-China trade war weighs on the global economic outlook. U.S. President Donald Trump said on Tuesday the U.S. still has a long way to go to conclude a trade deal with China but could impose tariffs on an additional $325 billion worth of Chinese goods if it needed to do so. The U.S. could also face Chinese sanctions, following a World Trade Organization ruling on Tuesday. Interest rate futures traders are pricing in a 65% chance of a 25 basis point cut this month and a 35% likelihood of a 50 basis point cut, according to the CME Group’s FedWatch tool. Strong demand for European government debt is also adding to demand for U.S. Treasuries. U.S. debt offers a significantly higher yield than comparable German government bonds, which traded at a yield of minus 0.29% on Wednesday. (Editing by Susan Thomas) )

TREASURIES-U.S. yields rise on strong retail sales

Jul 16 2019

(Adds data, Powell comments; updates prices) * Retail sales beat economists' expectations in June * Fed's Powell pledges to 'act as appropriate' for the economy * Atlanta Fed raises GDP estimate for second quarter By Karen Brettell NEW YORK, July 16 U.S. Treasury yields rose on Tuesday after data showed that U.S. retail sales increased more than expected in June, adding to recent evidence that the economy is improving. The Commerce Department said retail sales rose 0.4% last month as households stepped up purchases of motor vehicles and a variety of other goods. Economists polled by Reuters had forecast retail sales edging up 0.1% in June. “There’s a lot of upside surprises in the details,” said Tom Simons, a money market economist at Jefferies in New York. “This is certainly bond negative because it suggests that the economy is still doing really well and the Fed is about to add some more fuel to the fire, and maybe we do get some inflation,” Simons said. Other data on Tuesday also showed that manufacturing output rose 0.4% in June, after gaining 0.2% in May. The Atlanta Fed lifted its GDP growth estimate for the second quarter by two-tenths of a percentage point to a 1.6% annualized rate after the data releases. The estimate, though, remains below the 3.1% pace of growth in the January-March quarter. Benchmark 10-year notes fell 8/32 in price to yield 2.118%, up from 2.092% late on Monday. The Federal Reserve is seen as certain to cut rates when it meets later this month, even as the U.S. economic picture improves. Fed Chairman Jerome Powell on Tuesday reiterated pledges to "act as appropriate" to keep the U.S. economy humming, in a speech that did not deviate from expectations that a rate cut is on the way. Records from the U.S. central bank’s latest meeting, released last week, showed increasing fear that a U.S.-China trade war is indirectly causing businesses to hold back on buying equipment, giving workers a raise and hiking their prices. Interest rate futures traders are pricing in a 73% chance of a 25 basis point cut and a 27% likelihood of a 50 basis point cut, according to the CME Group’s FedWatch tool. The U.S. yield curve has steepened in the past week as the U.S. economic picture improves. Data earlier this month showed that U.S. job growth rebounded strongly in June while underlying consumer prices also gained by the most in nearly 1-1/2 years in the month. The yield curve between two-year and 10-year notes has steepened to 26 basis points, from 15 basis points last Tuesday. (Reporting by Karen Brettell; Editing by Steve Orlofsky) )

TREASURIES-Yields rise on strong retail sales

Jul 16 2019

* Retail sales beat economists' expectations in June * Fed's Powell to speak on Tuesday By Karen Brettell NEW YORK, July 16 U.S. Treasury yields gained on Tuesday after data showed that U.S. retail sales increased more than expected in June, adding to recent evidence that the economy is improving. The Commerce Department said retail sales rose 0.4% last month as households stepped up purchases of motor vehicles and a variety of other goods. Economists polled by Reuters had forecast retail sales edging up 0.1% in June. “There’s a lot of upside surprises in the details,” said Tom Simons, a money market economist at Jefferies in New York. “This is certainly bond negative because it suggests that the economy is still doing really well and the Fed is about to add some more fuel to the fire, and maybe we do get some inflation,” Simons said. Benchmark 10-year notes fell 13/32 in price to yield 2.138%, up from 2.092% late on Monday. The Federal Reserve is seen as certain to cut rates when it meets later this month, even as the U.S. economic picture improves. Records from the U.S. central bank’s latest meeting, released last week, showed increasing fear that a U.S.-China trade war that has done little to directly restrain growth is indirectly causing businesses to hold back on buying equipment, giving workers a raise and hiking their prices. Interest rate futures traders are pricing in a 73% chance of a 25 basis point cut and a 27% likelihood of a 50 basis point cut, according to the CME Group’s FedWatch tool. Numerous Fed officials are due to speak on Tuesday, including Chairman Jerome Powell. Their comments will be evaluated for further clues on interest rate policy. The U.S. yield curve has steepened in the past week as the U.S. economic picture improves. Data earlier this month showed that U.S. job growth rebounded strongly in June while underlying consumer prices also gained by the most in nearly 1-1/2 years in the month. The yield curve between two-year and 10-year notes has steepened to 26 basis points, from 15 basis points last Tuesday. (Editing by Susan Thomas) )

TREASURIES-Long-dated yields fall, retail sales data in focus

Jul 15 2019

(Adds yield context, European bond moves, updates prices) * Retail sales data on Tuesday next economic focus * Yield curve has steepened on stronger U.S. data By Karen Brettell NEW YORK, July 15 Longer-dated U.S. Treasury yields edged lower on Monday as investors focused on Tuesday’s retail sales figures as the next indicator of the strength of the U.S. economy. The U.S. yield curve has steepened in the past week, led by higher longer-dated yields, as the U.S. economic picture improves. Data earlier this month showed that U.S. job growth rebounded strongly in June while underlying consumer prices also gained by the most in nearly 1-1/2 years in the month. “The question is whether we are going to get more of the same,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York. Data on Tuesday is expected to show that retail sales gained 0.1% in June, according to the median estimate of economists polled by Reuters. Benchmark 10-year notes gained 3/32 in price to yield 2.10%, after testing the 2.15% level in overnight trading for the third consecutive trading session, the highest level since June 11. The yield curve between two-year and 10-year notes flattened by one basis point to 26 basis points on Monday, but is up from 15 basis points last Tuesday. The Federal Reserve is expected to cut rates when it meets later this month, even as the U.S. economic picture improves. “They are concerned more about the slowdown in global growth” and inflation expectations, said Rajappa. Records from the U.S. central bank’s latest meeting, released last week, showed increasing fear that a U.S.-China trade war that has done little to directly restrain growth is indirectly causing businesses to hold back on buying equipment, giving workers a raise and hiking their prices. A rate cut this month is seen as certain with interest rate futures traders pricing in a 72% chance of a 25 basis point cut and a 28% likelihood of a 50 basis point cut, according to the CME Group’s FedWatch tool. U.S. bond yields are also being held down as European government debt trades in negative territory. The benchmark German bund yield fell to minus -0.30% on Monday, though it remains 12 bps off record lows hit earlier this month. (Reporting by Karen Brettell; Editing by Andrea Ricci and Chizu Nomiyama) )

CORRECTED-TREASURIES-Long-dated yields fall, retail sales data in focus

Jul 15 2019

(Corrects yields in headline and first paragraph) * Retail sales data on Tuesday next economic focus * Yield curve steepens after stronger U.S. data By Karen Brettell NEW YORK, July 15 Longer-dated U.S. Treasury yields edged lower on Monday as investors focused on Tuesday’s retail sales figures as the next indicator of the strength of the U.S. economy. The U.S. yield curve has steepened in the past week, led by higher longer-dated yields, as the U.S. economic picture improves. Data earlier this month showed that U.S. job growth rebounded strongly in June while underlying consumer prices also gained by the most in nearly 1-1/2 years in the month. “The question is whether we are going to get more of the same,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York. Data on Tuesday is expected to show that retail sales gained 0.1% in June, according to the median estimate of economists polled by Reuters. The yield curve between two-year and 10-year notes has steepened to 26 basis points, from 15 basis points last Tuesday. The Federal Reserve is expected to cut rates when it meets later this month, even as the U.S. economic picture improves. “They are concerned more about the slowdown in global growth” and inflation expectations, said Rajappa. Records from the U.S. central bank’s latest meeting, released last week, showed increasing fear that a U.S.-China trade war that has done little to directly restrain growth is indirectly causing businesses to hold back on buying equipment, giving workers a raise and hiking their prices. A rate cut this month is seen as certain with interest rate futures traders pricing in a 72% chance of a 25 basis point cut and a 28% likelihood of a 50 basis point cut, according to the CME Group’s FedWatch tool. (Reporting by Karen Brettell; Editing by Andrea Ricci) )

Strong jobs gains send dollar to more than two-week highs

Jul 05 2019

NEW YORK The U.S. dollar gained against a basket of currencies to its highest levels in 2-1/2 weeks on Friday after data showed that U.S. job growth rebounded strongly in June.

FOREX-Strong jobs gains send dollar to more than two week highs

Jul 05 2019

* U.S. jobs gains in June beat economists' expectations * Wage growth remained tepid in the month * Euro hurt by weak German industrial orders (New throughout, updates trading and comments to U.S. market open, new byline, changes dateline, previous LONDON) By Karen Brettell NEW YORK, July 5 The U.S. dollar gained against a basket of currencies to its highest levels in 2-1/2 weeks on Friday after data showed that U.S. job growth rebounded strongly in June. Non-farm payrolls increased by 224,000 jobs last month, the most in five months, and more than the 160,000 jobs forecast by economists. It came after job growth slowed sharply in May. The economy created 11,000 fewer jobs in April and May than previously reported, the government said on Friday. "You look at the U.S. number for today and there’s quite a bit of sticker shock with that," said Bipan Rai, North American head of fx strategy at CIBC Capital Markets in Toronto. “We think the sticker shock and thin liquidity is enough to drive the dollar a little bit firmer for today.” The data came as many traders and investors were away, a day after the July 4 holiday and before the weekend. The dollar index against a basket of six major currencies was last at 97.261, the highest since June 19 and up 0.51% on the day. Moderate wage gains, however, added to evidence that the economy is slowing while the increase in jobs was also not enough to offset weakness in May. ”You did get a massive upside surprise but again that’s coming after a month in which you had a massive downside miss," Rai said. "If you take the two numbers together you are still averaging at a clip that’s slower than prior years’ growth." Average hourly earnings rose six cents or 0.2% after gaining 0.3% in May. That kept the annual increase in wages at 3.1% for a second straight month. The dollar has weakened from a two-year high reached in May on growing expectations that the Federal Reserve is closer to cutting interest rates. A relentless slide in European government bond yields, however, has at the same time forced investors to look for higher yielding assets elsewhere, which is holding back a sustained euro rally against the greenback. The euro also came under pressure on Friday after data showed that German industrial orders fell far more than expected in May and the Economy Ministry warned on Friday that this sector of Europe's largest economy was likely to remain weak in the coming months. ======================================================== Currency bid prices at 9:19AM (1319 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1230 $1.1284 -0.48% -2.08% +1.1287 +1.1230 Dollar/Yen JPY= 108.4300 107.7900 +0.59% -1.66% +108.5000 +107.7900 Euro/Yen EURJPY= 121.76 121.67 +0.07% -3.53% +121.9200 +121.6100 Dollar/Swiss CHF= 0.9915 0.9850 +0.66% +1.03% +0.9924 +0.9846 Sterling/Dollar GBP= 1.2510 1.2576 -0.52% -1.94% +1.2587 +1.2511 Dollar/Canadian CAD= 1.3102 1.3050 +0.40% -3.92% +1.3127 +1.3045 Australian/Dollar AUD= 0.6987 0.7019 -0.46% -0.88% +0.7029 +0.6989 Euro/Swiss EURCHF= 1.1134 1.1114 +0.18% -1.07% +1.1147 +1.1110 Euro/Sterling EURGBP= 0.8973 0.8969 +0.04% -0.12% +0.8982 +0.8959 NZ Dollar/Dollar NZD= 0.6629 0.6686 -0.85% -1.31% +0.6694 +0.6629 Dollar/Norway NOK= 8.5872 8.5308 +0.66% -0.60% +8.5889 +8.5277 Euro/Norway EURNOK= 9.6422 9.6278 +0.15% -2.66% +9.6499 +9.6237 Dollar/Sweden SEK= 9.4084 9.3206 +0.40% +4.96% +9.4109 +9.3198 Euro/Sweden EURSEK= 10.5650 10.5230 +0.40% +2.93% +10.5710 +10.5177 (Editing by Bill Trott)

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