April 2, 2019 / 6:39 PM / 2 months ago

TREASURIES-U.S. yields fall on Brexit jitters, bargain-hunting

    * U.S. durables goods orders fall in February
    * Messy Brexit talk spurs safe-haven demand for bonds
    * U.S. 10-year yield above 2.50% Monday attracts buying
    * Investors turn most bearish on Treasuries since Jan. -

 (Updates market action, adds quote, graphic)
    By Richard Leong
    NEW YORK, April 2 (Reuters) - U.S. Treasury yields slipped
on Tuesday, with benchmark yields receding from one-week highs
as a result of buying from bargain-minded investors and
safe-haven demand on renewed worries about Brexit.
    A U.S. government report showing a decline in domestic
durable goods orders in February supported the view that the
U.S. economy was losing momentum in the first quarter, spurring
bids for government securities.
    "The strength behind the Treasury market right now is
evident when we reach certain support levels, like 2.50% on the
10-year note," said Kevin Giddis, head of fixed income capital
markets at Raymond James in Memphis, Tennessee.
    Treasury yields retreated after posting their biggest
single-day jump in three months on Monday, prompted by upbeat
factory data in China and the United States. 
    The reports from the world's two biggest economies ignited a
rally in stock prices around the world and reduced the appeal of
low-yielding bonds.
    "Yesterday was about better-than-expected numbers, today is
about weaker-than-expected numbers with a technical twist,"
Giddis said.
    The yields on benchmark 10-year Treasury notes
were 2.4813%, down 1.6 basis points on the day. On Monday, it
reached 2.5080%, the highest since March 22.
    Last Thursday, 10-year yields hit a 15-month low of 2.340%.
    The U.S. Commerce Department said on Tuesday that total
orders for durable goods tumbled 1.6% in February, led by a 4.8%
drop in demand for transportation equipment. They edged up 0.1%
in January.
    Jitters about the world economy were also stoked by the lack
of a breakthrough in negotiations for Britain to leave the
European Union, analysts said.
    EU officials said on Tuesday the prospect of Britain leaving
the economic bloc without a deal in 10 days was growing. 
    U.K. Prime Minister Theresa May said on Tuesday she would
request a further postponement of Brexit to buy time for her to
work with the opposition Labour party in an attempt to break the
parliamentary stalemate.
    There was no huge follow-through buying of Treasuries during
U.S. trading, hinting some caution ahead of the release of the
U.S. payrolls report on Friday.
    The upcoming jobs report "bears more significance because we
are heading into it at these extreme (yield) levels," said
Gregory Faranello, head of rates at Roberts & Ryan Investments
in New York.
    A J.P. Morgan survey showed bond investors it polled on
Monday turned their most bearish on longer-dated Treasuries
since early January.
April 2 Tuesday 2:28PM New York / 1828 GMT
 US T BONDS JUN9               148-11/32    4/32      
 10YR TNotes JUN9              123-204/256  6/32      
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             2.38         2.428     -0.014
 Six-month bills               2.38         2.4491    -0.005
 Two-year note                 99-227/256   2.3085    -0.018
 Three-year note               100-80/256   2.2646    -0.022
 Five-year note                99-60/256    2.2882    -0.023
 Seven-year note               99-48/256    2.3768    -0.024
 10-year note                  101-72/256   2.4777    -0.019
 30-year bond                  102-76/256   2.8847    -0.005
         YIELD CURVE           Last (bps)   Net       
 10-year vs 2-year yield       16.80        0.20      
 30-year vs 5-year yield       59.60        2.85      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        11.75        -1.00    
 U.S. 3-year dollar swap         8.75        -1.50    
 U.S. 5-year dollar swap         4.50        -0.50    
 U.S. 10-year dollar swap       -1.25        -1.25    
 U.S. 30-year dollar swap      -24.75        -1.00    

 (Reporting by Richard Leong; Editing by Jeffrey Benkoe and
James Dalgleish)
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