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Richard Leong

TREASURIES-Wall Street rally lifts U.S. bond yields to 3-week peaks

Jan 18 2019

* U.S. factory output rises more than forecast in December * Hopes for end to U.S.-China trade spat boosts Wall Street * U.S. consumer sentiment sags to weakest since Trump's win * U.S. stock, bond markets to close Monday (Updates market action, adds quotes) By Richard Leong NEW YORK, Jan 18 U.S. Treasury yields climbed to three-week highs on Friday as investors piled back into Wall Street on hopes Washington and Beijing were moving to end their trade dispute as well as on stronger-than-expected data on manufacturing output. Bond yields increased for a second week as 10-year yields climbed further from the near one-year low on Jan. 4. "It's a belief the thaw between the U.S. and China is growing so that's stabilizing markets. The risk-on environment is weighing on bonds here," said Craig Bishop, lead strategist of U.S. fixed income strategies at RBC Wealth Management in Minneapolis. The improved outlook on trade came in the aftermath of a Wall Street Journal report that U.S. Treasury Secretary Steven Mnuchin was considering lifting some or all tariffs imposed on Chinese imports. The Treasury denied Mnuchin floated such a recommendation. The S&P 500 index was up 1.10 percent, while the Dow was 1.15 percent higher and the Nasdaq was up 0.81 percent. The yield on benchmark 10-year Treasury notes hit a three-week peak, last trading at 2.781 percent, 3.4 basis points above Thursday's close. The 10-year yield climbed about 8 basis points this week, its biggest weekly rise since the week of Nov. 2, according to Refinitiv data. Treasury yields have risen partly on competition from higher-yielding corporate bonds. Companies have raised $25.7 billion through investment-grade debt sales this week, according to IFR. Worries about a slowing U.S. economy eased following a Federal Reserve report that showed industrial production grew 0.3 percent in December as manufacturing output surged, more than what analysts had forecast. But consumer sentiment deteriorated in early January to its weakest since October 2016, before Donald Trump's presidential victory, according to a University of Michigan survey. The federal government shutdown, which is in its 28th day, remains a concern for investors as well as consumers. Given the recent batch of mixed data and volatility in the stock market, Fed officials have signaled they are in no hurry to raise interest rates again after a rate hike last month. Interest rates futures implied traders saw about a 27 percent chance of a rate increase by year-end, up from 19 percent a week earlier but down from 40 percent a month ago, CME Group's FedWatch program showed. Earlier Friday, New York Fed President John Williams said the U.S. central bank must be patient and guided by data when deciding whether to raise interest rates. San Francisco Fed chief Mary Daly said she was leaning toward pausing rate hikes for a while. U.S. financial markets will be closed on Monday for the Martin Luther King Jr. holiday. January 18 Friday 3:04PM New York / 2004 GMT Price US T BONDS MAR9 144-19/32 -14/32 10YR TNotes MAR9 121-44/256 -11/32 Price Current Net Yield % Change (bps) Three-month bills 2.355 2.4012 -0.009 Six-month bills 2.4375 2.5013 -0.004 Two-year note 99-202/256 2.6118 0.048 Three-year note 99-182/256 2.6013 0.049 Five-year note 100-8/256 2.618 0.049 Seven-year note 99-144/256 2.6944 0.046 10-year note 102-236/256 2.7824 0.035 30-year bond 105-112/256 3.0943 0.018 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 16.90 -1.65 30-year vs 5-year yield 47.50 -2.70 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 15.25 -1.50 spread U.S. 3-year dollar swap 11.75 -1.00 spread U.S. 5-year dollar swap 8.75 -0.25 spread U.S. 10-year dollar swap 3.25 0.00 spread U.S. 30-year dollar swap -18.25 0.75 spread (Reporting by Richard Leong; Editing by Chris Reese and Andrea Ricci)

TREASURIES-U.S. bond yields hit 3-week highs as Wall Street rallies

Jan 18 2019

* U.S. factory output rises more than forecast in December * Hopes for end to U.S.-China trade spat boosts Wall Street * U.S. consumer sentiment sags to weakest since Trump's win * U.S. financial markets closed Monday (Updates market action, adds graphics) By Richard Leong NEW YORK, Jan 18 U.S. Treasury yields rose to three-week highs on Friday as investors piled back into Wall Street on hopes Washington and Beijing are moving to end their trade dispute and stronger-than-expected data on manufacturing output. Bond yields were on track for a second week of increases as 10-year yields climbed further from the near one-year low set two weeks ago. "The risk-on mood has caused yields to move higher," said John Canavan, market strategist at Stone & McCarthy Research Associates in New York. The S&P 500 index was up 1.21 percent, while the Dow was 1.16 percent higher and the Nasdaq was up 1.17 percent. The improved outlook on trade came in the aftermath of a Wall Street Journal report that U.S. Treasury Secretary Steven Mnuchin was considering lifting some or all tariffs imposed on Chinese imports. The Treasury denied Mnuchin floated such a recommendation. The yield on benchmark 10-year Treasury notes hit a three-week peak, last trading at 2.791 percent, 4.4 basis points above Thursday's close. The 10-year yield was poised to increase almost 9 basis points this week, which would be the biggest weekly rise since the week of Nov. 2, according to Refinitiv data. Treasury yields have risen partly on competition from higher-yielding corporate bonds. Companies have raised $25.7 billion through investment-grade debt sales this week, according to IFR. Worries about a slowing U.S. economy eased following a Federal Reserve report that showed industrial output grew 0.3 percent in December, more than what analysts had forecast. But consumer sentiment deteriorated in early January to its weakest since October 2016, before Donald Trump's presidential victory, according to the University of Michigan. The federal government shutdown, which is in its 28th day, remains a concern for investors as well as consumers. Given the recent batch of mixed data and volatility in the stock market, Fed officials have signaled they are in no hurry to raise interest rates again after a rate hike last month. Earlier Friday, New York Fed President John Williams said the U.S. central bank must be patient and guided by data when deciding whether to raise interest rates. U.S. financial markets will be closed on Monday for the Martin Luther King Jr. holiday. January 18 Friday 11:54 AM New York/1654 GMT Price US T BONDS MAR9 144-12/32 -21/32 10YR TNotes MAR9 121-32/256 -13/32 Price Current Net Yield % Change (bps) Three-month bills 2.36 2.4063 -0.004 Six-month bills 2.4375 2.5013 -0.004 Two-year note 99-203/256 2.6097 0.046 Three-year note 99-178/256 2.6068 0.055 Five-year note 99-254/256 2.6265 0.057 Seven-year note 99-132/256 2.7019 0.054 10-year note 102-216/256 2.7914 0.044 30-year bond 105-48/256 3.1067 0.031 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 18.00 -0.55 30-year vs 5-year yield 48.00 -2.25 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 15.75 -1.00 spread U.S. 3-year dollar swap 11.75 -1.00 spread U.S. 5-year dollar swap 8.75 -0.25 spread U.S. 10-year dollar swap 3.25 0.00 spread U.S. 30-year dollar swap -18.50 0.50 spread (Reporting by Richard Leong; Editing by Chris Reese)

CORRECTED-TREASURIES-U.S. bond yields hit 3-week highs as Wall Street rallies

Jan 18 2019

(Corrects headline, lead to say three-week highs, not three-month highs) * U.S. factory output rises more than forecast in December * Hopes for end to U.S.-China trade spat boost Wall Street * U.S. consumer sentiment sags to weakest since Trump's win * U.S. financial markets closed Monday By Richard Leong NEW YORK, Jan 18 U.S. Treasury yields rose to three-week highs on Friday as investors piled back into Wall Street on hopes Washington and Beijing are moving to end their trade dispute and stronger-than-expected data on manufacturing production. Bond yields were on track for a second week of increase as 10-year yields climbed further from the near one-year low set two weeks ago. "The risk-on mood has caused yields to move higher," said John Canavan, market strategist at Stone & McCarthy Research Associates in New York. S&P 500 index was up 1.09 percent, while the Dow was 1.01 percent higher and the Nasdaq was up 1.1 percent. The improved outlook on trade came in the aftermath of a Wall Street Journal report that a report that U.S. Treasury Secretary Steven Mnuchin was considering lifting some or all tariffs imposed on Chinese imports. The Treasury denied Mnuchin floated such recommendation. The yield on benchmark 10-year Treasury notes hit a near three-week peak of 2.790 percent. It was last 2.786 percent, 3.9 basis points higher than Thursday's close. The 10-year yield was poised to increase almost 9 basis points this week, which would be the biggest weekly increase since the week of Nov. 2, according to Refinitiv data. Treasury yields have risen partly on competition from higher-yielding corporate bonds. Companies have raised $25.7 billion through investment-grade debt sales this week, according to IFR. Worries about a slowing U.S. economy eased following a Federal Reserve report that showed industrial output grew 0.3 percent in December, more than what analysts had forecast. But consumer sentiment deteriorated in early January to its weakest level since October 2016, before Donald Trump's presidential victory, according to the University of Michigan. The federal government shutdown, which is in its 28th day, remains a concern for investors as well as consumers. Given the recent batch of mixed data and volatility in the stock market, Fed officials have signaled they are in hurry to raise interest rates again after a rate hike last month. Earlier Friday, New York Fed President John Williams said the U.S. central bank must be patient and guided by data when deciding whether to raise interest rates.. U.S. financial markets will be closed on Monday for the Martin Luther King Jr. holiday. January 18 Friday 11:22AM New York / 1622 GMT Price US T BONDS MAR9 144-14/32 -19/32 10YR TNotes MAR9 121-44/256 -11/32 Price Current Net Yield % Change (bps) Three-month bills 2.36 2.4063 -0.004 Six-month bills 2.44 2.5039 -0.001 Two-year note 99-207/256 2.6014 0.037 Three-year note 99-186/256 2.5958 0.044 Five-year note 100-8/256 2.618 0.049 Seven-year note 99-144/256 2.6944 0.046 10-year note 102-232/256 2.7842 0.037 30-year bond 105-72/256 3.102 0.026 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 18.10 -0.40 30-year vs 5-year yield 48.20 -1.95 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 15.75 -1.00 spread U.S. 3-year dollar swap 11.75 -1.00 spread U.S. 5-year dollar swap 8.75 -0.25 spread U.S. 10-year dollar swap 3.25 0.00 spread U.S. 30-year dollar swap -18.50 0.50 spread (Reporting by Richard Leong)

TREASURIES-U.S. yields rise on economic data, trade hopes

Jan 17 2019

* Philly Fed, jobless claims data pare economic worries * U.S.' Mnuchin mulled lifting levies on China - WSJ * U.S. sells $13 bln 10-year TIPS to solid investor demand * U.S. economy remains "very strong" - Fed's Quarles (Updates market action, adds quote) By Richard Leong NEW YORK, Jan 17 U.S. Treasury yields rose on Thursday with the benchmark 10-year yield reaching near three-week highs as better-than-expected economic data and hopes for progress in U.S.-China trade talks diminished safe-haven demand for government debt. U.S. Treasury Secretary Steven Mnuchin had considered removing some or all tariffs on Chinese imports in an effort to resolve the stalemate between Beijing and the Trump administration, the Wall Street Journal said, citing people familiar with the internal deliberations. A Treasury spokesperson told CNBC that Mnuchin had not made any such recommendations, causing Treasury yields to retreat from their session peaks. This week's offering of corporate bonds put some upward pressure on Treasury yields, as dealers sold Treasuries to lock in borrowing costs on debt they underwrote and investors reduced their U.S. government debt holdings to make room for the corporate supply, traders and analysts said. On the other hand, the historically long government shutdown and uncertainty about Brexit have kept a lid on Treasury yields, keeping them in a tight trading range. "There are still a lot of geopolitic risks out there," said Wen Lu, U.S. rates strategist at TD Securities in New York. "Rates are going to stay in a range for the next couple of weeks." The yield on benchmark 10-year Treasury notes hit a near three-week peak of 2.761 percent. It was last 2.749 percent, 2.0 basis points higher than Wednesday's close. Bond yields fell earlier Wednesday along with weaker U.S. stock index futures after U.S. lawmakers introduced bills on Wednesday that would ban the sale of U.S. computer chips or other components to Chinese firms that violate U.S. sanctions or export control laws. This legislative move had pared optimism about Washington and Beijing resolving their trade issues. The initial safe-haven demand for Treasuries faded following an unexpected fall in domestic first-time filings for unemployment benefits last week and a stronger-than-forecast increase in early January on a measure of Mid-Atlantic business activity from the Philadelphia Federal Reserve. The U.S. economy remains "very strong" with inflation contained, Fed Governor Randal Quarles said. The 10-year Treasury yield hit a near one-year low of 2.543 percent almost two weeks ago on concerns about weakening economic growth and bets the U.S. central bank may not raise interest rates in 2019. On the supply front, companies have raised $21.4 billion through investment-grade debt sales this week, according to IFR. The Treasury Department sold $13 billion in 10-year Treasury Inflation Protected Securities to solid investor demand. January 17 Thursday 3:23PM New York / 2023 GMT Price US T BONDS MAR9 145-2/32 -4/32 10YR TNotes MAR9 121-124/256 -8/32 Price Current Net Yield % Change (bps) Three-month bills 2.3625 2.4095 -0.011 Six-month bills 2.4375 2.502 0.002 Two-year note 99-222/256 2.5699 0.023 Three-year note 99-216/256 2.5545 0.025 Five-year note 100-58/256 2.5758 0.031 Seven-year note 99-212/256 2.6521 0.030 10-year note 103-56/256 2.7486 0.020 30-year bond 105-220/256 3.0734 -0.002 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 17.70 -0.25 30-year vs 5-year yield 49.60 -3.60 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 15.75 -0.75 spread U.S. 3-year dollar swap 12.25 -0.25 spread U.S. 5-year dollar swap 8.75 -0.25 spread U.S. 10-year dollar swap 3.00 0.00 spread U.S. 30-year dollar swap -19.25 1.00 spread (Reporting by Richard Leong Editing by Tom Brown)

TREASURIES-U.S. yields edge up as economic data offsets trade jitters

Jan 17 2019

* Philly Fed, jobless claims data pare economic worries * Trade tensions, weak results spur early bids for bonds * U.S. to sell $13 bln 10-year TIPS at 1 p.m. (1800 GMT) (Updates market action, adds quote) By Richard Leong NEW YORK, Jan 17 U.S. Treasury yields ticked up on Thursday as better-than-expected economic data offset trade tensions between China and the United States, holding down safe-haven bids for U.S. government debt. This week's offering of corporate bonds put some upward pressure on Treasury yields, as dealers sold Treasuries to lock in borrowing costs on debt they underwrote and investors reduced their U.S. government debt holdings to make room for the corporate supply, traders and analysts said. On the other hand, the historically long government shutdown and uncertainty about Brexit have kept a lid on Treasury yields, holding them in a tight trading range this week. "A lot of the risk events this week haven't done a lot to the various parts of the yield curve," said Mike Lorizio, head of Treasury and agency trading at Manulife Asset Management in Boston. At 10:37 a.m. (1537 GMT), the yield on benchmark 10-year Treasury notes was 2.734 percent, up 0.5 basis point from late on Wednesday. Bond yields were lower earlier along with weaker U.S. stock index futures after U.S. lawmakers introduced bills on Wednesday that would ban the sale of U.S. computer chips or other components to Chinese firms that violate U.S. sanctions or export control laws. This legislative move reduced optimism about Washington and Beijing to resolve their trade issues. The initial safe-haven demand for Treasuries faded following an unexpected fall in domestic first-time filings for unemployment benefits last week and a stronger-than-forecast increase in early January on a measure of Mid-Atlantic business activity from the Philadelphia Federal Reserve. The 10-year Treasury yield hit a near one-year low of 2.543 percent almost two weeks ago on concerns about weakening economic growth and bets the U.S. central bank may not raise interest rates in 2019. On the supply front, companies have raised $21.4 billion through investment-grade debt sales this week, according to IFR. The Treasury Department will sell $13 billion in 10-year Treasury Inflation Protected Securities at 1 p.m. (1800 GMT). January 17 Thursday 10:38 AM New York / 1538 GMT Price US T BONDS MAR9 145-7/32 1/32 10YR TNotes MAR9 121-164/256 -3/32 Price Current Net Yield % Change (bps) Three-month bills 2.365 2.4121 -0.008 Six-month bills 2.4375 2.502 0.002 Two-year note 99-227/256 2.5596 0.013 Three-year note 99-224/256 2.5436 0.014 Five-year note 100-80/256 2.5572 0.012 Seven-year note 99-244/256 2.6323 0.010 10-year note 103-88/256 2.7343 0.005 30-year bond 105-240/256 3.0695 -0.006 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 17.20 -0.80 30-year vs 5-year yield 51.20 -2.10 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 16.50 0.00 spread U.S. 3-year dollar swap 12.50 0.00 spread U.S. 5-year dollar swap 9.50 0.50 spread U.S. 10-year dollar swap 3.50 0.50 spread U.S. 30-year dollar swap -20.00 0.25 spread (Reporting by Richard Leong)

TREASURIES-Stock gains, corporate supply lift U.S. bond yields

Jan 16 2019

* Upbeat bank earnings pare safe-haven bids for U.S. bonds * UK PM May wins confidence vote, Brexit remains unclear * Growing U.S. corporate bond supply spurs Treasury sales * Fed's Beige Book shows tight jobs market, risks rising (New throughout, updates prices, market activity and comments) By Richard Leong NEW YORK, Jan 16 U.S. Treasury yields rose on Wednesday as stronger-than-forecast results from two major U.S. banks lifted Wall Street to one-month highs and British Prime Minister Theresa May's win of a confidence vote, reducing safety bids for U.S. government debt. Rising supply of corporate bonds also lifted Treasury yields, as dealers sold Treasuries to lock in interest rates on the debt they underwrote. The $15.6 trillion sector has been trading in a choppy fashion since late 2018 due to stock market volatility and investor bets that the Federal Reserve might pause in raising short-term U.S. interest rates. "The bond market is being held hostage by stock market moves and Fed speak," said Mary Anne Hurley, vice president of fixed income at D.A. Davidson in Seattle. U.S.-China trade tensions, the long federal government shutdown and uncertainty over Brexit have also weighed on investor sentiment. Wall Street's major indexes hit one-month highs as Goldman Sachs and Bank of America posted strong results. The yield on benchmark 10-year Treasury notes was up 1.7 basis points at 2.725 percent. It has risen from a near one-year low of 2.543 percent reached a week and a half earlier. U.K. Prime Minister Theresa May clung to leadership after a crushing defeat of her Brexit deal. Now she can work on another proposal for Britain to leave the European Union by late March, but it remains unclear whether she can reach a deal with Brussels that other British lawmakers would accept. Two-year U.S. Treasury yields, which are sensitive to views on Fed policies, were 1.8 basis points higher at 2.547 percent. Nearly two weeks ago, they touched 2.372 percent, which was the lowest level since May 30. Fed officials including Chairman Jerome Powell have signaled in recent days that the U.S. central bank is willing to be patient before raising interest rates again. The Fed's latest Beige Book, a snapshot of regional economic conditions, showed labor markets tightened in early January, but businesses grew more worried about market volatility, trade tension and rising interest rates. On the supply front, companies raised about $6 billion with investment-grade bond issues on Wednesday, bringing the month-to-date issuance over $60 billion, according to IFR. Wednesday, Jan. 16 at 1541 EST (2041 GMT): Price US T BONDS MAR9 145-10/32 -3/32 10YR TNotes MAR9 121-188/256 -6/32 Price Current Net Yield Change (pct) (bps) Three-month bills 2.37 2.4174 -0.034 Six-month bills 2.43 2.4944 -0.026 Two-year note 99-233/256 2.5471 0.018 Three-year note 99-234/256 2.5299 0.019 Five-year note 100-98/256 2.5421 0.018 Seven-year note 100-8/256 2.6199 0.020 10-year note 103-108/256 2.7254 0.017 30-year bond 105-236/256 3.0703 0.001 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 17.50 0.15 30-year vs 5-year yield 52.80 -1.40 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 16.00 -0.50 spread U.S. 3-year dollar swap 12.25 0.00 spread U.S. 5-year dollar swap 9.00 0.00 spread U.S. 10-year dollar swap 3.00 0.50 spread U.S. 30-year dollar swap -20.25 0.75 spread (Reporting by Richard Leong Editing by Frances Kerry and David Gregorio)

U.S. stocks pause after five-day rally; dollar rebounds

Jan 11 2019

NEW YORK Wall Street ended little changed on Friday, taking a breather following a five-day winning streak, while the dollar rebounded against most currencies from earlier losses tied to expectations the U.S. central bank is in no hurry to raise interest rates. | Video

TREASURIES-U.S. 10-year yield hits 10-month lows amid Wall St volatility

Dec 28 2018

* U.S. Treasuries on track for best month in 2-1/2 years * Treasury funds attract most inflows since February 2015 -Lipper * Pending home sales fall in Nov; Chicago PMI dips in Dec * U.S. bond market to close at 2 p.m. EST on Monday (Updates with late market action) By Richard Leong NEW YORK, Dec 28 U.S. Treasury yields slipped on Friday and 10-year yields hit their lowest level in over 10 months as investors remained anxious about the economy and turmoil in Washington including a partial government shutdown. The year-end stampede into safe-haven Treasuries has pushed the $15.5 trillion sector toward its biggest monthly rally in 2-1/2 years, on track to bring it into positive territory for 2018, according to an index compiled by Bloomberg and Barclays. "It's been a move in risk reduction. Treasuries have always served that role. There's a lot of chaos out there," said Jerry Paul, senior vice president of fixed income at ICON Advisers in Denver. Wall Street tacked on gains on Friday, building on a late rally on Thursday. Earlier in the volatile week, the benchmark S&P 500 index touched a 20-month low. Then on Wednesday the S&P 500, the Dow Jones industrial average and Nasdaq logged their biggest daily jumps in nearly a decade. In a sign the stock market might stabilize, U.S. fund investors shifted $5.2 billion into equity mutual funds and ETFs for the first time in six weeks, according to research service firm Lipper late on Thursday. Investors also added $4.2 billion to Treasury funds in the week ended Dec. 26, the most since February 2015, the Lipper data showed. Signs of softening business activity and a flat Treasury yield curve have raised concerns the U.S. economy might enter a recession in late 2019. Those worries have stoked bets the Federal Reserve might stop raising interest rates, analysts said. Domestic pending home sales unexpectedly fell by 0.7 percent in November, while the Chicago Purchasing Management Index slipped in December. Trade tensions between China and the United States have added to worries about corporate profits and the economy. Still, some investors reckoned a tight U.S. labor market and the massive federal tax cut enacted a year ago would provide an adequate boost for the economy going into 2019. "The economy has too much going for it to have a recession," said James Sarni, senior portfolio manager with Payden & Rygel in Los Angeles. Benchmark 10-year Treasury yields were down 2.7 basis points at 2.716 percent, after touching 2.713 percent in late trading, which was the lowest level since Feb. 6. Two-year yields ended at 2.518 percent, which was the lowest level since July 2. As of Thursday, the Treasury sector, tracked by Bloomberg and Barclays, had generated a total return of 1.88 percent in December, on track for its strongest monthly performance since June 2016, when it produced a 2.21 percent gain. The U.S. bond market will close early at 2 p.m. EST (1900 GMT) on Monday on New Year's Eve and stay shut on Tuesday for New Year's Day. December 28 Friday 4:06PM New York / 2106 GMT Price US T BONDS MAR9 145-27/32 10/32 10YR TNotes MAR9 121-200/256 8/32 Price Current Net Yield % Change (bps) Three-month bills 2.3425 2.3886 -0.021 Six-month bills 2.415 2.4781 -0.021 Two-year note 99-248/256 2.5161 -0.032 Three-year note 100-96/256 2.4924 -0.042 Five-year note 100-86/256 2.553 -0.038 Seven-year note 100 2.625 -0.035 10-year note 103-136/256 2.7146 -0.028 30-year bond 106-224/256 3.0237 -0.005 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 19.70 -0.50 30-year vs 5-year yield 46.80 3.00 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 15.00 1.25 spread U.S. 3-year dollar swap 11.00 1.50 spread U.S. 5-year dollar swap 4.50 0.00 spread U.S. 10-year dollar swap 1.75 0.00 spread U.S. 30-year dollar swap -18.25 -1.25 spread (Reporting by Richard Leong; Editing by Tom Brown and Leslie Adler)

TREASURIES-U.S. 10-year yield hovers at 8-month lows as Wall Street stays volatile

Dec 28 2018

* U.S. Treasuries on track for best month in 2-1/2 years * Treasury funds attract most inflows since February 2015 - Lipper * Pending home sales fall in Nov, Chicago PMI dips in Dec * U.S. bond market to close at 2 p.m. EST on Monday (Updates market action) By Richard Leong NEW YORK, Dec 28 U.S. Treasury yields slipped on Friday with 10-year yields hovering near eight-month lows as Wall Street remained volatile, with investors anxious about the economy and turmoil in Washington including a partial government shutdown. The year-end stampede into safe-haven Treasuries has pushed the $15.5 trillion sector toward its biggest monthly rally in 2-1/2 years, on track to bring it into positive territory for 2018, according to an index compiled by Bloomberg and Barclays. "It's been a move in risk reduction. Treasuries have always served that role. There's a lot of chaos out there," said Jerry Paul, senior vice president of fixed income at ICON Advisers in Denver. Wall Street tacked on gains on Friday, building on a late rally on Thursday. Earlier in the volatile week, the benchmark S&P 500 index touched a 20-month low. Then on Wednesday, the S&P 500, the Dow Jones industrial average and Nasdaq logged their biggest daily jump in nearly a decade. In a sign the stock market might stabilize, U.S. fund investors shifted $5.2 billion into equity mutual funds and ETFs for the first time in six weeks, according to research service firm Lipper late on Thursday. Investors also added $4.2 billion in to Treasury funds in the week ended Dec. 26, the most since February 2015, Lipper data showed. Signs of softening business activity and a flat Treasury yield curve have raised concerns the U.S. economy might enter a recession in late 2019. Those worries have stoked bets the Federal Reserve might stop raising interest rates, analysts said. Domestic pending home sales unexpectedly fell by 0.7 percent in November, while the Chicago Purchasing Management Index slipped in December. Trade tensions between China and the United States have added to worries about corporate profits and the economy. Still some investors reckoned a tight U.S. labor market and the massive federal tax cut enacted a year ago would provide an adequate boost for the economy going into 2019. "The economy has too much going for it to have a recession," said James Sarni, senior portfolio manager with Payden & Rygel in Los Angeles. Benchmark 10-year Treasury yields were down 0.3 basis point at 2.740 percent after touching 2.720 percent on Wednesday, which was the lowest level since April 2. Two-year yields retested 2.526 percent earlier Friday, which was the lowest since July 2. They were marginally lower at 2.534 percent. As of Thursday, the Treasury sector, tracked by Bloomberg and Barclays, had generated a total return of 1.88 percent in December, on track for its strongest monthly performance since June 2016 when it produced a 2.21 percent gain. The U.S. bond market will close early at 2 p.m. EST (1900 GMT) on Monday on New Year's Eve and stay shut on Tuesday for New Year's Day. December 28 Friday 3:01PM New York / 2001 GMT Price US T BONDS MAR9 145-13/32 -4/32 10YR TNotes MAR9 121-156/256 3/32 Price Current Net Yield % Change (bps) Three-month bills 2.3425 2.3886 -0.021 Six-month bills 2.4175 2.4807 -0.018 Two-year note 99-239/256 2.5343 -0.014 Three-year note 100-78/256 2.5172 -0.017 Five-year note 100-60/256 2.5747 -0.016 Seven-year note 99-216/256 2.6496 -0.010 10-year note 103-76/256 2.7413 -0.002 30-year bond 106-96/256 3.0482 0.019 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 20.40 0.15 30-year vs 5-year yield 47.20 3.50 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 14.00 0.25 spread U.S. 3-year dollar swap 10.25 0.75 spread U.S. 5-year dollar swap 4.75 0.25 spread U.S. 10-year dollar swap 1.50 -0.25 spread U.S. 30-year dollar swap -18.25 -1.25 spread (Reporting by Richard Leong; Editing by David Gregorio and Tom Brown)

U.S. dollar share of global currency reserves hits near 5-year low: IMF

Dec 28 2018

The U.S. dollar's share of currency reserves reported to the International Monetary Fund fell in the third quarter to a near five-year low, while the euro's share of reserves grew to its largest in almost four years, data released on Friday showed.

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