February 8, 2019 / 8:35 PM / 3 months ago

TREASURIES-U.S. yields slide for 4th day on U.S.-China trade worries

 (Adds comment, updates prices)
    * U.S. 30-year yields fall to one-month low
    * U.S. 2-year, 10-year note yields decline to one-week low
    * U.S. yields tracking European market

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Feb 8 (Reuters) - U.S. Treasury yields fell for a
fourth straight session on Friday, pressured by global equity
market losses on concerns there would be no trade deal between
the United States and China by the March 1 deadline.
    U.S. 30-year yields dropped to one-month lows, while those
on two-year and 10-year notes slid to one-week troughs.
    "This is partially from an equity sell-off that has been a
little bit of a risk-off trade," said Ellis Phifer, fixed-income
strategist at Raymond James in Memphis, Tennessee.
    "We have the China trade talks, but we haven't really seen 
success at this point. Suddenly the bond market is taking its
clues from that."
    U.S. President Donald Trump said on Thursday he did not plan
to meet with Chinese President Xi Jinping before a March 1
deadline set by the two countries to achieve a trade deal.  
    A person briefed on the talks said Trump's advisers were
concerned that accepting a meeting invitation at this stage
would raise unfounded expectations for a quick deal and erode
U.S. leverage in the talks, where the two sides remain far apart
on core structural intellectual property issues.
    In afternoon trading, U.S. 10-year note yields fell to 2.632
percent, from 2.654 percent late on Thursday.
    U.S. 30-year bond yields were also down, at 2.973 percent
, from 3.006 percent on Thursday. Thirty-year yields
earlier fell to a one-month low of 2.971 percent.
    On the short end of the curve, U.S. 2-year yields slipped 
to 2.463 percent, compared with Thursday's 2.479 percent
.
    "The bullish undertones despite back-to-back weeks of coupon
supply serve to increase momentum toward lower yields across a
variety of tenors," said BMO Capital Markets in a research note.
    The bank noted that it is closely watching the 2.618 percent
level in the 10-year yield as a key near-term test. But with the
next nominal benchmark debt issuance not until Feb. 25, BMO said
the "lack of reintroduction of additional supply offers another
support for our long bias." 
    U.S. yields were also tracking those on Germany's 10-year
government bonds, which dropped below 0.1 percent for the first
time since late 2016 on Friday, reflecting concerns about
economic conditions in the euro zone's largest economy.

    The 10-year Bund yield fell as low as 0.097 percent
, dragging French and Dutch yields to their lowest
levels in more than two years,. 
    
      February 8 Friday 3:25PM New York / 2025 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             2.375        2.4219    0.010
 Six-month bills               2.4325       2.4963    0.010
 Two-year note                 100-17/256   2.465     -0.014
 Three-year note               100-46/256   2.4375    -0.013
 Five-year note                100-70/256   2.4412    -0.017
 Seven-year note               100-156/256  2.529     -0.016
 10-year note                  99-240/256   2.6321    -0.022
 30-year bond                  100-140/256  2.9723    -0.034
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        14.00         0.00    
 spread                                               
 U.S. 3-year dollar swap        10.75        -0.25    
 spread                                               
 U.S. 5-year dollar swap         8.75        -0.25    
 spread                                               
 U.S. 10-year dollar swap        2.25         0.00    
 spread                                               
 U.S. 30-year dollar swap      -18.75         0.00    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Dan Grebler
and Sonya Hepinstall)
  
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