November 29, 2019 / 6:50 PM / 17 days ago

TREASURIES-Yield steady, U.S.-China trade in focus

 (Adds Huawei report, updates prices)
    * Geopolitical tensions between U.S., China in focus
    * Month-end demand helps bond markets
    * Next week's jobs report next major economic focus

    By Karen Brettell
    NEW YORK, Nov 29 (Reuters) - U.S. Treasury yields were steady on Friday
after China said it would retaliate after the United States passed legislation
backing anti-government protesters in Hong Kong, potentially complicating the
chance of a bilateral trade deal.
    Bond yields fell overnight after China said on Thursday that it would take
"firm counter measures" in response to the legislation, and that attempts to
interfere in the Chinese-ruled city were doomed to fail.
    Officials in both countries have recently talked up the odds of reaching a
"phase one" trade deal, which may include a rollback in tariffs placed on each
others' goods.
    Sources told Reuters on Friday the U.S. government might expand its power to
stop more foreign shipments of products with U.S. technology to China's Huawei
Technologies Co Ltd         , after its blacklisting of the world's largest
telecoms equipment maker had failed to cut off its supplies.
    The benchmark 10-year note yielded 1.767%, little changed from
late Wednesday. The bond market was closed on Thursday for the U.S. Thanksgiving
Day holiday and will close early at 2:00 p.m. EST on Friday.
    Trading volumes were light as many traders and investors remained on holiday
through the weekend.
    Month-end demand by investors rebalancing bond portfolios was seen as
helping demand for bonds on Friday.
    The New York Federal Reserve injected $88.45 billion in liquidity into the
overnight repurchase agreement market on Friday as part of its ongoing
operations to support short-term funding markets.
    Funding stresses in September prompted the Federal Reserve to intervene and
it has pledged to continue the operations through the year-end period, when
banks and other investors reduce risk taking, which can elevate funding
stresses.
    The next major U.S. economic focus will be the November jobs report due next
Friday.
    
      November 29 Friday 1:25PM New York / 1825 GMT
                               Price        Current   Net Change
                                            Yield %   (bps)
 Three-month bills             1.555        1.5825    -0.026
 Six-month bills               1.58         1.619     0.000
 Two-year note                 99-202/256   1.6079    -0.018
 Three-year note               100-14/256   1.6059    -0.011
 Five-year note                99-112/256   1.6177    -0.006
 Seven-year note               99-100/256   1.7178    -0.001
 10-year note                  99-216/256   1.7671    0.000
 30-year bond                  103-240/256  2.1949    0.003
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         1.00         0.75    
 spread                                               
 U.S. 3-year dollar swap        -2.50         0.75    
 spread                                               
 U.S. 5-year dollar swap        -3.75         1.00    
 spread                                               
 U.S. 10-year dollar swap       -7.25         0.75    
 spread                                               
 U.S. 30-year dollar swap      -33.25         0.25    
 spread                                               
 

    
    

 (Editing by Chizu Nomiyama and Richard Chang)
  
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