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United States

Richard Leong

U.S. yield curve: Invert, steepen, repeat

Aug 20 2019

A swift steepening of the U.S. 2-year/10-year yield curve after it inverted last week may have given investors hope that the United States can escape recession. They should probably take a breath.

Explainer: Countdown to recession - What an inverted yield curve means

Aug 14 2019

Yields on U.S. 10-year Treasury notes <US10YT=RR> slid below those on two-year notes <US2YT=RR> on Wednesday, delivering a reliable recession signal and sending shudders through global financial markets.

Explainer: Countdown to recession - What an inverted yield curve means

Aug 14 2019

The spread between yields on U.S. two-year and 10-year notes, a closely watched metric, is likely to invert for the first time since 2007. That would follow the inversion of another part of the yield curve earlier in the year. Here is what that means.

EXPLAINER-Countdown to recession: What an inverted yield curve means

Aug 13 2019

Aug 13 - The spread between yields on U.S. two-year and 10-year notes, a closely watched metric, is likely to invert for the first time since 2007. That would follow the inversion of another part of the yield curve earlier in the year. Here is what that means.

TREASURIES OUTLOOK-U.S. bond yields rise on confusion over U.S. trade move

Aug 09 2019

* U.S. keeps ban on government business with China's Huawei * U.S may let firms trade with Chinese telecom firm * Italy's political woes rattle confidence on euro zone (Repeats to additional subscribers) By Richard Leong NEW YORK, Aug 9 U.S. Treasury yields rose on Friday amid confusion over the United States policy on trade with China, while political turmoil in Italy compounded investor concerns, capping a volatile week in the bond market. Treasury yields fell for a second week, though they stayed above the multi-year lows set on Wednesday when the yield on the 30-year bond came within striking distance of a record low. Adding to investors' jitters was news that the British economy unexpectedly contracted in the second quarter, the first time since 2012, as Prime Minister Boris Johnson prepares to pull the country out of the European Union in October. "Global economic data continue to trend lower. We like bonds as a diversifier," said Bill Merz, head of fixed income research at U.S. Bank Wealth Management in Minneapolis. Trade tensions between China and United States remain the main driver for financial markets. President Donald Trump said on Friday the United States is not going to do business with Chinese telecom giant Huawei. His comments supported an earlier Bloomberg report that said Washington was delaying a decision to allow some trade between U.S. firms and China's telecom equipment maker Huawei again. Trump's remarks were seen as the latest U.S. move pushing the world's two biggest economies toward a full-blown trade war that could spark a global downturn and stoke more turbulence in financial markets. Wall Street shares fell and pushed bond yields lower. Bond yields reversed to move higher after Fox Business reporter Edward Lawrence posted a tweet citing a White House official saying that Trump meant "ONLY the ban on Federal Departments buying from Huawei. White House Official says Commerce Dept Process for special licenses still going forward." "It created a whole level of uncertainty and that's not good," said Mary Ann Hurley, vice president of fixed income at D.A. Davidson in Seattle. Worries about Italy, the euro zone's third biggest economy, were rekindled late on Thursday after its deputy prime minister, Matteo Salvini, sought snap elections following a period of public fighting between Salvini's League party and coalition partner the anti-establishment 5-Star Movement. In late U.S. trading, benchmark 10-year Treasury yields were 2.1 basis points higher at 1.736%. They hit 1.595% on Wednesday, which was their lowest level since October 2016. Ten-year yields fell for a second week, marking their steepest two-week drop in nearly eight years, according to Refinitiv data. The yield on the 30-year, or long, bond was up 0.9 basis point at 2.256%. On Wednesday, the 30-year yield fell to 2.123%, within striking distance of the all-time low of 2.089% set in July 2016, according to Refinitiv data. Longer-dated yields were supported earlier by data that showed U.S. domestic producer prices grew modestly in July, with core prices posting their first decline since October 2015. Sluggish inflation, together with trade and geopolitical turmoil, reinforced traders' expectations the Federal Reserve will lower its key lending rate by at least a quarter point at its next policy meeting, on Sept. 17-18. Interest rates futures implied traders expect the U.S. central bank may cut rates at each of its remaining policy meetings this year, according to CME Group's FedWatch program. August 9 Friday 4:13PM New York / 2013 GMT Price US T BONDS SEP9 161-8/32 -10/32 10YR TNotes SEP9 129-180/256 -7/32 Price Current Net Yield % Change (bps) Three-month bills 1.9575 1.9941 -0.029 Six-month bills 1.9025 1.9526 -0.010 Two-year note 100-58/256 1.6324 0.015 Three-year note 99-204/256 1.5696 0.025 Five-year note 100-228/256 1.5629 0.026 Seven-year note 101-136/256 1.6415 0.026 10-year note 99 1.7344 0.019 30-year bond 99-244/256 2.2522 0.005 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 9.90 0.45 30-year vs 5-year yield 68.80 1.05 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap -1.50 1.50 spread U.S. 3-year dollar swap -4.00 1.25 spread U.S. 5-year dollar swap -7.25 1.00 spread U.S. 10-year dollar swap -12.00 1.50 spread U.S. 30-year dollar swap -41.75 1.25 spread (Reporting by Richard Leong; Editing by Leslie Adler)

U.S. bond yields rise on confusion over U.S. trade move

Aug 09 2019

NEW YORK U.S. Treasury yields rose on Friday amid confusion over the United States policy on trade with China, while political turmoil in Italy compounded investor concerns, capping a volatile week in the bond market.

Market weighs risk of negative U.S. Treasury yields

Aug 09 2019

Traders and analysts are considering whether U.S. bond yields would fall below zero as a record amount around the world sank into negative territory this week.

TREASURIES-U.S. bond yields fall on worries about trade, Europe

Aug 09 2019

* U.S. PPI rate posts surprising first drop since 2015 * U.S. may delay letting firms trade with China's Huawei * Italy's political woes rattle confidence on euro zone * British economy unexpectedly contracts in Q2 ahead of Brexit (Updates market action, adds background) By Richard Leong NEW YORK, Aug 9 U.S. Treasury yields fell on Friday as trade worries about China and the United States flared up, along with political jitters in Italy and the UK economy's surprise contraction in the second quarter, fueling demand for safe-haven U.S. debt. Washington, meanwhile, was delaying a decision on permitting some trade between U.S. companies and China's telecom equipment maker Huawei, in retaliation for Beijing suspending its purchases of U.S. farming goods, Bloomberg reported. Worries about Italy, the euro zone's third-biggest economy, were rekindled late on Thursday after its deputy prime minister, Matteo Salvini, sought snap elections following a period of public fighting between Salvini's League party and the anti-establishment 5-Star Movement. Adding to investors' jitters was news that the British economy unexpectedly contracted in the second quarter, the first time since 2012, as Prime Minister Boris Johnson prepares to pull the country out of the European Union in October. "These are not positive news, but they are bond-friendly news," said Mary Ann Hurley, vice president of fixed income at D.A. Davidson in Seattle. "No one wants to go short going into the weekend because they don't know what's going to happen." At 10:52 a.m. (1452 GMT), benchmark 10-year Treasury yields were 1.3 basis points lower at 1.702%. They hit 1.595% on Wednesday, which was their lowest level since October 2016. Ten-year yields are on track for a second week of decline, which would be their steepest two-week drop in nearly eight years, according to Refinitiv data. The yield on the 30-year, or long, bond was down 3.3 basis points at 2.214%. On Wednesday, the 30-year yield fell to 2.123%, within striking distance of an all-time low of 2.089% set in July 2016, according to Refinitiv data. Longer-dated yields were also supported by data that showed U.S. domestic producer prices grew modestly in July, with core prices posting their first decline since October 2015. Sluggish inflation, together with trade and geopolitical turmoil, reinforced traders' expectations the Federal Reserve would lower its key lending rate by at least a quarter point at its Sept. 17-18 policy meeting. Interest rates futures implied traders expect the U.S. central bank may cut rates at each of its policy meetings the rest of the year, according to CME Group's FedWatch program. August 9 Friday 10:35AM New York / 1435 GMT Price US T BONDS SEP9 162-11/32 25/32 10YR TNotes SEP9 130-32/256 7/32 Price Current Net Yield % Change (bps) Three-month bills 1.96 1.9967 -0.026 Six-month bills 1.895 1.9448 -0.018 Two-year note 100-76/256 1.596 -0.021 Three-year note 99-234/256 1.5294 -0.016 Five-year note 101-30/256 1.5156 -0.021 Seven-year note 101-224/256 1.5896 -0.025 10-year note 99-116/256 1.6847 -0.030 30-year bond 101-40/256 2.1972 -0.050 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 8.50 -1.10 30-year vs 5-year yield 68.00 0.30 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap -2.00 1.00 spread U.S. 3-year dollar swap -4.50 0.75 spread U.S. 5-year dollar swap -6.75 1.50 spread U.S. 10-year dollar swap -11.75 1.75 spread U.S. 30-year dollar swap -42.00 1.00 spread (Reporting by Richard Leong; Editing by Dan Grebler)

TREASURIES OUTLOOK-U.S. bond yields rise as Wall Street rebounds

Aug 08 2019

* Latest 30-year bond sold at lowest yield in three years * U.S. jobless claims unexpectedly fell last week * Germany may consider new debt for climate plan -official * Italy's deputy prime minister Salvini wants new elections (Repeats to additional subscribers) By Richard Leong NEW YORK, Aug 8 U.S. Treasury yields rose on Thursday, with 30-year yields climbing from a near-record low, as traders scaled back safe-haven holdings of U.S. government debt as Wall Street continued to rebound from a recent rout. Fears about a global downturn, exacerbated by the trade tensions between China and the United States, had sparked a sharp sell-off in stock markets and stoked a rush into Treasuries, yen, gold and other perceived safe assets. Even so, the safe-haven appeal of Treasuries for investors has not gone away as fears of a downturn continue to overhang the market and threaten the possibility of another stock market sell-off. "The only hedge to equity underperformance are bonds," said Priya Misra, head of global rates strategy at TD Securities. "People are looking at any backup in yields as a buying opportunity." The rise in bond yields started overnight in overseas bond markets. German yields moved up from record lows in response to better-than-expected Chinese trade data and a steadying of China's yuans currency. Global yields also got a lift after Reuters reported that Germany is considering whether to issue new debt to fund a climate protection program, according to a senior government official. A surprise drop in U.S. jobless claims last week also allayed fears of a recession. Bond yields retreated from their session highs even after a mediocre $19 billion 30-year bond auction. Some safe-haven demand for Treasuries returned in late U.S. trading after Italian deputy prime minister Matteo Salvini said the country's governing coalition had broken down and the only way forward was to hold new elections. In late U.S. trading, the yield on the 30-year, or long, bond was up 3.5 basis points at 2.230%, while on Wall Street the S&P 500 was up 1.9%. On Wednesday, the 30-year yield fell to 2.123%, within striking distance of an all-time low of 2.089% set in July 2016, according to Refinitiv data. Benchmark 10-year Treasury yields were 2.6 basis points higher at 1.717% after hitting 1.595% on Wednesday, which was their lowest level since October 2016. Longer-dated U.S. yields faced additional upward pressure from this week's debt supply for the government's $84 billion quarterly refunding. Investor demand for $19 billion in the latest 30-year bond on Thursday and $27 billion in 10-year Treasuries on Wednesday turned out softer than expected. On the short-end of the yield curve, the margin of three-month T-bill rates over 10-year note yields shrank to 29 basis points after touching 40 basis points a day earlier, which was the highest level in 12-1/2 years. An inversion between these two maturities has preceded a recession in the past 50 years. Thursday, Aug. 8, at 1541 EDT (1941 GMT): Price US T BONDS SEP9 161-13/32 -26/32 10YR TNotes SEP9 129-224/256 -9/32 Price Current Net Yield % Change (bps) Three-month bills 1.9775 2.0149 -0.006 Six-month bills 1.9125 1.9633 0.020 Two-year note 100-63/256 1.6228 0.052 Three-year note 99-218/256 1.5508 0.046 Five-year note 100-250/256 1.5453 0.043 Seven-year note 101-168/256 1.6229 0.038 10-year note 99-24/256 1.724 0.033 30-year bond 113-188/256 2.2402 0.045 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 9.90 -2.55 30-year vs 5-year yield 69.40 -0.65 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap -3.25 -1.00 spread U.S. 3-year dollar swap -5.25 0.00 spread U.S. 5-year dollar swap -8.00 0.25 spread U.S. 10-year dollar swap -13.25 -0.25 spread U.S. 30-year dollar swap -43.00 -1.25 spread (Reporting by Richard Leong; Editing by Susan Thomas and Leslie Adler)

TREASURIES-U.S. bond yields rise as Wall Street rebounds

Aug 08 2019

* Latest 30-year bond sold at lowest yield in three years * U.S. jobless claims unexpectedly fell last week * Germany may consider new debt for climate plan -official * Italy's deputy prime minister Salvini wants new elections (Updates market action, adds quote) By Richard Leong NEW YORK, Aug 8 U.S. Treasury yields rose on Thursday, with 30-year yields climbing from a near-record low, as traders scaled back safe-haven holdings of U.S. government debt as Wall Street continued to rebound from a recent rout. Fears about a global downturn, exacerbated by the trade tensions between China and the United States, had sparked a sharp sell-off in stock markets and stoked a rush into Treasuries, yen, gold and other perceived safe assets. Even so, the safe-haven appeal of Treasuries for investors has not gone away as fears of a downturn continue to overhang the market and threaten the possibility of another stock market sell-off. "The only hedge to equity underperformance are bonds," said Priya Misra, head of global rates strategy at TD Securities. "People are looking at any backup in yields as a buying opportunity." The rise in bond yields started overnight in overseas bond markets. German yields moved up from record lows in response to better-than-expected Chinese trade data and a steadying of China's yuans currency. Global yields also got a lift after Reuters reported that Germany is considering whether to issue new debt to fund a climate protection program, according to a senior government official. A surprise drop in U.S. jobless claims last week also allayed fears of a recession. Bond yields retreated from their session highs even after a mediocre $19 billion 30-year bond auction. Some safe-haven demand for Treasuries returned in late U.S. trading after Italian deputy prime minister Matteo Salvini said the country's governing coalition had broken down and the only way forward was to hold new elections. In late U.S. trading, the yield on the 30-year, or long, bond was up 3.5 basis points at 2.230%, while on Wall Street the S&P 500 was up 1.9%. On Wednesday, the 30-year yield fell to 2.123%, within striking distance of an all-time low of 2.089% set in July 2016, according to Refinitiv data. Benchmark 10-year Treasury yields were 2.6 basis points higher at 1.717% after hitting 1.595% on Wednesday, which was their lowest level since October 2016. Longer-dated U.S. yields faced additional upward pressure from this week's debt supply for the government's $84 billion quarterly refunding. Investor demand for $19 billion in the latest 30-year bond on Thursday and $27 billion in 10-year Treasuries on Wednesday turned out softer than expected. On the short-end of the yield curve, the margin of three-month T-bill rates over 10-year note yields shrank to 29 basis points after touching 40 basis points a day earlier, which was the highest level in 12-1/2 years. An inversion between these two maturities has preceded a recession in the past 50 years. Thursday, Aug. 8, at 1541 EDT (1941 GMT): Price US T BONDS SEP9 161-13/32 -26/32 10YR TNotes SEP9 129-224/256 -9/32 Price Current Net Yield % Change (bps) Three-month bills 1.9775 2.0149 -0.006 Six-month bills 1.9125 1.9633 0.020 Two-year note 100-63/256 1.6228 0.052 Three-year note 99-218/256 1.5508 0.046 Five-year note 100-250/256 1.5453 0.043 Seven-year note 101-168/256 1.6229 0.038 10-year note 99-24/256 1.724 0.033 30-year bond 113-188/256 2.2402 0.045 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 9.90 -2.55 30-year vs 5-year yield 69.40 -0.65 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap -3.25 -1.00 spread U.S. 3-year dollar swap -5.25 0.00 spread U.S. 5-year dollar swap -8.00 0.25 spread U.S. 10-year dollar swap -13.25 -0.25 spread U.S. 30-year dollar swap -43.00 -1.25 spread (Reporting by Richard Leong; Editing by Susan Thomas and Leslie Adler)

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