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Kate Duguid

Bond bears stalk a FANG, short Netflix debt

Oct 15 2018

NEW YORK In March, noted short-seller Andrew Left took a swipe at Netflix Inc's stock, calling the online video company's aggressive spending on content acquisition "unsustainable."

TREASURIES-U.S. bond market sinks further on solid jobs data

Oct 05 2018

* U.S. 30-year yield has biggest weekly jump since Trump win * Technical signals hint bond market's most oversold since Feb * U.S. bond market to shut on Monday for Columbus Day * U.S. Treasury to sell $74 bln in coupon-bearing debt next week (Recasts lead, updates market action, adds graphics) By Kate Duguid and Richard Leong NEW YORK, Oct 5 The U.S. Treasuries market tumbled for a third straight day on Friday with the 10-year yield hitting a seven-year high, as a solid payrolls report fueled jitters about rising inflation and more interest rate hikes. The 30-year yield rang up its steepest weekly increase since November 2016 in the aftermath of Donald Trump's surprise U.S. presidential win, which touched off a bond market rout on fears that Trump's campaign promise on massive tax cuts and federal spending would drive up inflation. This week's selloff began on Wednesday following stunningly strong economic data and hawkish remarks from Federal Reserve officials. A breach of crucial technical supports also spurred selling in Treasuries, analysts and fund managers said. "There is momentum for this move. I wouldn’t be surprised if the 10-year yield gets to 3.5 percent by the end of the year," said Don Ellenberger, head of multi-sector strategies at Federated Investors in Pittsburgh. The benchmark 10-year Treasury yield rose nearly 4 basis points at 3.233 percent after hitting a seven-year peak at 3.248 percent earlier on Friday. The 30-year yield reached a four-year high at 3.424 percent before retreating to 3.404 percent in late trading. Prior to the selloff, positioning data released late on Friday showed speculators had built huge bets on bond yields to rise. For the week, the 10-year yield jumped nearly 18 basis points, the biggest such rise since February, while the 30-year yield increased almost 21 basis points, the most in about 23 months. Treasury yields briefly fell when the Labor Department said domestic employers added 134,000 jobs last month, the smallest gains in a year. But yields quickly resumed their rise as traders focused on strong aspects of the report: a steady rise in wages and a fall in the jobless rate to a near 49-year low. The bond market faces more hurdles next week when the Treasury market will sell a combined $74 billion in three-year, 10-year and 30-year debt. "The bigger picture is that the supply is relentless," Ellenberger said. "The underlying supply and demand technical is supporting yields to go higher." The U.S. bond market will be closed on Monday for the U.S. Columbus Day holiday. Some analysts said the market selloff is overdone because data suggested that inflation remains relatively tame and most Fed officials are in favor of raising rates gradually. Some chart indicators suggested the $15 trillion sector is the most oversold since February. October 5 Friday 4:33PM New York / 2033 GMT Price US T BONDS DEC8 137-7/32 -22/32 10YR TNotes DEC8 117-160/256 -8/32 Price Current Net Yield % Change (bps) Three-month bills 2.175 2.2167 -0.005 Six-month bills 2.35 2.4105 -0.003 Two-year note 99-188/256 2.8891 0.009 Three-year note 99-88/256 2.9849 0.015 Five-year note 99-24/256 3.0727 0.021 Seven-year note 98-232/256 3.176 0.036 10-year note 97 3.2328 0.038 30-year bond 92-116/256 3.4045 0.050 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 34.20 2.70 30-year vs 5-year yield 33.00 3.00 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 17.25 0.25 spread U.S. 3-year dollar swap 15.75 0.25 spread U.S. 5-year dollar swap 11.25 0.00 spread U.S. 10-year dollar swap 3.75 -0.75 spread U.S. 30-year dollar swap -11.25 -1.50 spread (Reporting by Kate Duguid and Richard Leong; editing by Tom Brown and Leslie Adler)

TREASURIES-Yields rise, curve steepens after solid jobs report

Oct 05 2018

(Recasts; adds analyst quote, updates yields, table) By Kate Duguid NEW YORK, Oct 5 U.S. Treasury yields across maturities rose on Friday with longer-date bonds at multi-year peaks, steepening the yield curve, after the Labor Department reported U.S. job growth slowed in September but wages rose steadily. The 30-year Treasury bond reached a four-year high of 3.424 percent, up 7 basis points from late Thursday. The benchmark 10-year yield rose to 3.248 percent, up 5.3 basis points. Longer-dated yields, which reflect traders' views of the health of the economy, often rise on strong data. Robust economic growth prompts many investors to sell safe-haven Treasuries and take on assets with higher potential returns. "We take it as a strong report that doesn't change the landscape and that should allow the 10-year yield to creep up to 3.25 percent," said Matt Toms, chief investment officer of fixed income at Voya Investment Management. Nonfarm payrolls increased by 134,000 jobs last month, the fewest in a year, but the Labor Department report also showed a steady rise in wages, implying a rise in inflation, which could keep the Federal Reserve on its path of gradual interest rate increases. "The report was solid even though the headline did miss. The unemployment rate fell for the right reasons and the wage number was strong. What was odd was the rate-market reaction to this," said Priya Misra, head of global rates strategy at TD Securities. Yields fell immediately after the report, then whipsawed to hit session highs. Yields kept rising in afternoon trade as Treasury prices sank, extending a sell-off this week. On Wednesday, a U.S. government bond index compiled by Bank of America Merrill Lynch posted its biggest daily price loss since March 2017 on economic reports about the U.S. service sector and private payrolls. The yield curve steepened, with the spread between two- and 10-year yields last at 34.6 basis points, up from 31.5 late Thursday. The five- and 30-year yield spread was last at 33.8 basis points also up from Thursday. Other analysts suggested that the rise in yields was primarily a result of increasing supply. As the Fed winds down its post-crisis bond-buying and the Treasury issues more debt to pay for President Donald Trump's $1.5 trillion tax cut, the market has been flooded with new supply. BlackRock estimates that the net supply of Treasury securities will more than double this year, to over $900 billion, and rise to nearly $1.2 trillion in 2019, Breakingviews reports. "The bigger picture is that the supply is relentless," said Don Ellenberger, head of multi-sector strategies at Federated Investors. "The underlying supply and demand technical is supporting yields to go higher." October 5 Friday 2:21PM New York / 1821 GMT Price US T BONDS DEC8 137 -0-29/32 10YR TNotes DEC8 117-160/256 -0-60/25 6 Price Current Net Yield % Change (bps) Three-month bills 2.175 2.2167 -0.005 Six-month bills 2.355 2.4157 0.002 Two-year note 99-188/256 2.8891 0.009 Three-year note 99-86/256 2.9877 0.018 Five-year note 99-22/256 3.0744 0.022 Seven-year note 98-232/256 3.176 0.036 10-year note 96-252/256 3.2347 0.040 30-year bond 92-84/256 3.4116 0.058 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 16.00 0.50 spread U.S. 5-year dollar swap 11.00 -0.25 spread U.S. 10-year dollar swap 3.75 -0.75 spread U.S. 30-year dollar swap -11.25 -1.50 spread (Reporting by Kate Duguid; editing by David Gregorio and Tom Brown)

TREASURIES-Yields hit multi-year highs after solid jobs report

Oct 05 2018

(Recasts; updates yields, market activity, comments, adds table) By Kate Duguid NEW YORK, Oct 5 U.S. Treasury yields across maturities hit multi-year highs on Friday, with the 10-year benchmark yield at a seven-year peak, after the Labor Department reported U.S. job growth slowed in September and wages rose steadily, suggesting modest inflation. The 30-year Treasury bond reached a four-year high of 3.412 percent, up 5.8 basis points from late Thursday. The benchmark 10-year yield rose to 3.246 percent, up 5.1 basis points from late Thursday. Longer-dated yields, which reflect views of the health of the economy, often rise on strong data. Robust economic growth prompts many investors to sell safe-haven Treasuries and take on assets with higher potential returns. "We take it as a strong report that doesn't change the landscape and that should allow the 10-year yield to creep up to 3.25 percent," said Matt Toms, chief investment officer of fixed income at Voya Investment Management. Nonfarm payrolls increased by 134,000 jobs last month, the fewest in a year, but the Labor Department report also showed a steady rise in wages, implying a rise in inflation, which could keep the Federal Reserve on its path of gradual interest rate increases. "The report was solid even though the headline did miss. The unemployment rate fell for the right reasons and the wage number was strong. What was odd was the rate-market reaction to this," said Priya Misra, head of global rates strategy at TD Securities. Yields fell immediately after the report, then whipsawed to hit session highs. Yields kept rising in afternoon trade as Treasury prices sank, extending a sell-off this week. On Wednesday, a U.S. government bond index compiled by Bank of America Merrill Lynch posted its biggest daily price loss since March 2017 on economic reports about the U.S. sevice sector and private payrolls. The yield curve steepened, with the spread between two- and 10-year yields last at 34 basis points, up from 31.5 late Thursday. The five- and 30-year yield spread was last at 32.5 basis points also up from Thursday. October 5 Friday 1:19PM New York / 1719 GMT Price US T BONDS DEC8 137-4/32 -0-25/32 10YR TNotes DEC8 117-160/256 -0-60/25 6 Price Current Net Yield % Change (bps) Three-month bills 2.175 2.2167 -0.005 Six-month bills 2.355 2.4157 0.002 Two-year note 99-186/256 2.8932 0.013 Three-year note 99-84/256 2.9905 0.020 Five-year note 99-18/256 3.0779 0.026 Seven-year note 98-228/256 3.1785 0.038 10-year note 96-252/256 3.2347 0.040 30-year bond 92-112/256 3.4054 0.051 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 17.25 0.25 spread U.S. 3-year dollar swap 15.75 0.25 spread U.S. 5-year dollar swap 11.00 -0.25 spread U.S. 10-year dollar swap 3.75 -0.75 spread U.S. 30-year dollar swap -11.00 -1.25 spread (Reporting by Kate Duguid; editing by Steve Orlofsky, Dan Grebler and David Gregorio)

TREASURIES-Yields up on solid jobs report, despite headline number miss

Oct 05 2018

(Recasts, adds analyst quote, updates table, yields) By Kate Duguid NEW YORK, Oct 5 Longer-dated U.S. Treasury yields rose on Friday after the Labor Department reported that U.S. job growth slowed in September and wages rose steadily, suggesting modest inflation. The 30-year Treasury bond reached a four-year high of 3.396 percent, up 4.5 basis points from late Thursday. The benchmark 10-year yield rose to 3.233 percent, up 3.8 basis points from late Thursday. Longer-dated yields, which reflect traders' views of the overall health of the economy, rise on strong data. Robust growth means buyers have investment options that are higher-yielding than Treasuries; prices on the safe-haven security rise in times of crisis. "We take it as a strong report that doesn't change the landscape and that should allow the 10-year yield to creep up to 3.25 percent," said Matt Toms, chief investment officer of fixed income at Voya Investment Management. Nonfarm payrolls increased by 134,000 jobs last month, the fewest in a year, likely as Hurricane Florence depressed restaurant and retail jobs. The Labor Department's report also showed a steady rise in wages, implying a rise in inflation, which could ease concerns about the economy overheating and keep the Federal Reserve on a path of gradual interest rate increases. "The report was solid even though the headline did miss. The unemployment rate fell for the right reasons and the wage number was strong. What was odd was the rate-market reaction to this," said Priya Misra, head of global rates strategy at TD Securities. The immediate market reaction following the announcement was a drop in yields, before they whipsawed to hit session highs. Misra said the surprising reaction was the result of a technical move similar to the one that factored into a 48-hour sell-off in Treasuries this week, driving yields across maturities to multi-year highs. "It seems a lot like the price reaction earlier this week, as it is being driven by Treasuries, not swaps. It’s met with a steeper curve, and it’s real-rate driven," she said. Yields were up in mid-morning trade, with the largest changes at the long end of the curve, after they had fallen from session highs hit after the data release. The yield curve was modestly steeper. Spreads between two- and 10-year yields and between five- and 30-year yields were up by less than a basis point, last at 31.9 basis points and 31.10 basis points respectively. October 5 Friday 10:47AM New York / 1447 GMT Price US T BONDS DEC8 137-13/32 -0-16/32 10YR TNotes DEC8 117-176/256 -0-44/25 6 Price Current Net Yield % Change (bps) Three-month bills 2.1775 2.2193 -0.003 Six-month bills 2.3575 2.4183 0.004 Two-year note 99-184/256 2.8973 0.017 Three-year note 99-82/256 2.9933 0.023 Five-year note 99-20/256 3.0761 0.024 Seven-year note 98-244/256 3.1684 0.028 10-year note 97-20/256 3.2233 0.028 30-year bond 92-204/256 3.3851 0.031 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 16.75 -0.25 spread U.S. 3-year dollar swap 15.50 0.00 spread U.S. 5-year dollar swap 11.25 0.00 spread U.S. 10-year dollar swap 4.25 -0.25 spread U.S. 30-year dollar swap -10.50 -0.75 spread (Reporting by Kate Duguid; editing by Steve Orlofsky and Dan Grebler)

TREASURIES-Yield curve steepens after miss on headline jobs number

Oct 05 2018

NEW YORK, Oct 5 Longer-dated U.S. Treasury yields rose on Friday, steepening the yield curve, after the Labor Department reported that U.S. job growth slowed in September and that wages rose steadily but without inflation that would raise concerns.

Treasuries spike after weaker-than-expected jobs number

Oct 05 2018

NEW YORK, Oct 5 U.S. Treasury yields rose sharply on Friday after the Labor Department reported that U.S. job growth slowed in September, though the unemployment rate fell to near a 49-year-low of 3.7 percent.

TREASURIES-Two-day bond selloff pushes U.S. benchmark yield to 7-year high

Oct 04 2018

NEW YORK, Oct 4 A selloff in U.S. Treasury bonds that has sent yields to multi-year highs continued on Thursday, pushing the benchmark 10-year bond yield to its highest level since May 2011.

U.S. junk bond spread over Treasuries narrows to post-crisis low

Oct 04 2018

NEW YORK, Oct 4 The spread between junk bonds and long-end U.S. Treasuries shrank to the narrowest since 2007 on Wednesday as the government debt sold off sharply, and analysts are closely watching to see if that could signal a coming end to the credit cycle.

TREASURIES-Two-day bond sell-off pushes benchmark yield to 7-year high

Oct 04 2018

(Adds paragraphs on wage growth, analyst quotes, table) By Kate Duguid NEW YORK, Oct 4 The sell-off in U.S. Treasury bonds that on Wednesday sent yields to multi-year highs continued overnight, pushing the benchmark 10-year bond yield to its highest level since May 2011. The yield on the benchmark 10-year note on Thursday hit a high of 3.232 percent, as strong U.S. economic data released the day before raised prospects that the nonfarm payrolls report due out on Friday morning would come in stronger than expected. The yield on the benchmark 10-year note on Wednesday made its largest daily jump since the U.S. presidential election in November 2016, as U.S. service sector activity hit a 21-year high and ADP private payrolls data for September came in stronger than expected. Of particular interest in Friday's payroll report will be average hourly earnings. "That sense of the market’s rising discomfort about inflation risks leads me to expect the wage inflation reading within the U.S. nonfarm payrolls on Friday will be critical to the current sell-off," wrote Brian Daingerfield, macro strategist at NatWest Markets. Expectations for Friday's data may have risen too far. "It is possible we'll see some retracement of the recent sell-off if the data disappoints or even if it doesn't match the expectation for the potential for a very strong print, particularly in average hourly earnings," said Jon Hill, U.S. rates strategist at BMO Capital Markets. An index compiled by the Bank of America Merrill Lynch which broadly measures Treasury market prices posted its worst one-day price loss since March 2017 on Wednesday. Trading in the global rates market was three times its normal volume in the Asian session, which boosted the 30-year Japanese government bond yield to its highest level since February 2016, according to research from BMO Capital Markets. The benchmark German government bond also rose to its highest since May 2018. "We saw very large overnight volumes during both the Tokyo and London trading hours, which was a catch-up in foreign sovereign markets to the very large sell-off in U.S. Treasuries yesterday," said Hill. The reports on Wednesday are likely to keep the Fed on track to raise rates again in December and suggest the U.S. central bank's tightening policy is unlikely to end any time soon. The Fed increased rates last week for the third time this year. Yields rose further late on Wednesday following a speech by Fed Chairman Jerome Powell in which he said the U.S. economy can expand for "quite some time." October 4 Thursday 10:21AM New York / 1421 GMT Price US T BONDS DEC8 138-7/32 -0-9/32 10YR TNotes DEC8 118-4/256 -0-28/25 6 Price Current Net Yield % Change (bps) Three-month bills 2.1825 2.225 0.002 Six-month bills 2.3525 2.4137 0.003 Two-year note 99-194/256 2.8762 0.016 Three-year note 99-104/256 2.9617 0.014 Five-year note 99-62/256 3.0399 0.016 Seven-year note 99-60/256 3.1228 0.015 10-year note 97-116/256 3.1776 0.017 30-year bond 93-172/256 3.3362 0.017 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 16.75 0.50 spread U.S. 3-year dollar swap 15.50 1.00 spread U.S. 5-year dollar swap 11.25 0.50 spread U.S. 10-year dollar swap 4.50 0.25 spread U.S. 30-year dollar swap -9.00 0.25 spread (Reporting by Kate Duguid Editing by Susan Thomas and Nick Zieminski)

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