January 24, 2019 / 5:04 PM / 4 months ago

TREASURIES-Trade, growth worries drag down U.S. bond yields

    * U.S.'s Ross says U.S., China "miles and miles" apart on
trade
    * ECB's Draghi says risk moved to downside
    * U.S. jobless claims fall to over 49-year low
    * U.S. to sell $113 bln in fixed-rate debt next week 

 (Updates market action, adds quote)
    By Richard Leong
    NEW YORK, Jan 24 (Reuters) - Treasury yields fell on
Thursday, with the 10-year's yield hitting a one-week low, as
anxiety about slowing global growth and trade tensions between
China and the United States renewed safe-haven demand for U.S.
government debt.
    Investor worries rose after U.S. Commerce Secretary Wilbur
Ross said the world's two biggest economies are "miles and
miles" from resolving their trade issues, although there is a
fair chance of reaching a deal.
    Across the Atlantic, European Central Bank President Mario
Draghi cautioned regional economic risks shifted to the downside
and hinted the ECB would leave interest rates at record lows
"through" the summer.
    Business growth in the euro zone weakened to its lowest
reading since July 2013 in January, according to IHS Markit.

    "It's not just an European issue. We are talking about a
global slowdown," said Stan Shipley, a strategist at Evercore
ISI in New York.
    As other areas of the U.S. economy have weakened, the
American jobs market has remained a bright spot.
    The Labor Department said first-time filings for
unemployment benefits fell to 199,000 last week, the lowest
level in more than 49 years.
    At 11:55 a.m. EST (1655 GMT), the yield on benchmark 10-year
Treasury notes was 4.1 basis points lower at 2.714
percent. It hit a one-week low of 2.708 percent earlier
Thursday.
    Two-year Treasury yields, which are sensitive to
traders' view on Federal Reserve policy, were down 2.5 basis
points at 2.566 percent.
    Interest rates futures implied traders expected a 18 percent
chance the Fed to raise key lending rates by the end of 2019,
down from 24 percent late on Wednesday, according to CME Group's
FedWatch program.
    On the supply front, the Treasury Department will sell a
combined $113 billion in two-year, five-year and seven-year
fixed-rate securities, the same amount it auctioned in December.

    It also will sell $20 billion in two-year floating-rate
notes next week, up from $18 billion auctioned last month.

    
  January 24 Thursday 11:56AM New York / 1656 GMT
                               Price                  
 US T BONDS MAR9               145-20/32    21/32     
 10YR TNotes MAR9              121-184/256  11/32     
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             2.355        2.4018    -0.008
 Six-month bills               2.445        2.5098    -0.003
 Two-year note                 99-223/256   2.5683    -0.023
 Three-year note               99-226/256   2.541     -0.033
 Five-year note                100-88/256   2.5501    -0.041
 Seven-year note               100-8/256    2.6199    -0.045
 10-year note                  103-128/256  2.7157    -0.039
 30-year bond                  106-128/256  3.0416    -0.027
         YIELD CURVE           Last (bps)   Net       
                                            Change    
                                            (bps)     
 10-year vs 2-year yield       14.60        -0.90     
 30-year vs 5-year yield       49.00        0.70      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        14.75        -0.25    
 spread                                               
 U.S. 3-year dollar swap        11.75         0.50    
 spread                                               
 U.S. 5-year dollar swap         8.00         0.25    
 spread                                               
 U.S. 10-year dollar swap        2.75         0.00    
 spread                                               
 U.S. 30-year dollar swap      -18.25         0.25    
 spread                                               
 
 (Reporting by Richard Leong; editing by Jonathan Oatis)
  
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