October 24, 2019 / 2:57 PM / 21 days ago

TREASURIES-U.S. yields fall for 3rd day as economic, global uncertainty weighs

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Oct 24 (Reuters) - U.S. Treasury yields fell for a
third straight session on Thursday in choppy trading, as
increasing economic, political, and global uncertainty spurred
investors to seek safety in the bond market.
    Issues surrounding Britain's exit from the European Union,
the impeachment inquiry into U.S. President Donald Trump and
mounting evidence of  U.S. economic weakness have dampened
Treasury yields.
    Analysts noted that even the one bright spot, Washington's
"phase 1" trade deal with Beijing on trade matters, has yet to
be put in paper.
    "We are sort of in a holding pattern in Treasury yields,"
said Ellis Phifer, market strategist, at Raymond James in
Memphis, Tennessee, noting there are a lot of issues plaguing
the market.
    Data showed new orders for key U.S.-made capital goods fell
more than expected in September and shipments declined,
reflecting weak business investment during the trade war.
    Orders for non-defense capital goods excluding aircraft,
seen as a measure of business spending plans on equipment, fell
0.5% last month, exceeding the 0.2% decline forecast by
economists polled by Reuters. The report showed slow demand for
transportation equipment, motor vehicles and parts, computers
and electronic products.
     Sales of new U.S. single-family homes also fell in
September even as prices notched the biggest monthly fall in
five years.
    "I think we are closer to recession than we have been. That
has a lot to do with business confidence," Raymond James' Phifer
said. "If businesses start pulling back, then we start getting
closer to recession."
    In morning trading, U.S. 10-year note yields
slid to 1.746% from 1.759% late on Wednesday.
    Yields on 30-year bonds fell to 2.233%, from 
2.251% on Tuesday.
    On the short-end of the curve, U.S. two-year yields were
down at 1.563%, from Wednesday's 1.582%.
    Later on Thursday, the U.S. Treasury will sell $32 billion
in seven-year notes and market participants expect strong demand
particularly after two strong auctions of two-year and five-year
notes this week.
    "The strong sponsorship for both 2s and 5s does not suggest
worry of a hawkish (Fed Chairman) Powell is sufficient to
dissuade buying at these yield levels," said BMO Capital Markets
in a research note. 
    "After all, we have seen a solid concession from the local
yield lows even as rates have consolidated this week."
    
      October 24 Thursday 10:44AM New York / 1444 GMT
                               Price                  
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.6275       1.6614    0.002
 Six-month bills               1.605        1.645     0.000
 Two-year note                 99-223/256   1.5657    -0.016
 Three-year note               99-116/256   1.564     -0.016
 Five-year note                99-172/256   1.5685    -0.012
 Seven-year note               99-198/256   1.6597    -0.010
 10-year note                  98-232/256   1.7467    -0.012
 30-year bond                  100-88/256   2.2341    -0.017
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         3.00        -0.25    
 spread                                               
 U.S. 3-year dollar swap        -1.00         0.00    
 spread                                               
 U.S. 5-year dollar swap        -2.50        -0.25    
 spread                                               
 U.S. 10-year dollar swap       -8.50        -0.50    
 spread                                               
 U.S. 30-year dollar swap      -38.25        -0.25    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by David
Gregorio)
  
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