November 20, 2018 / 2:52 PM / 8 months ago

TREASURIES-Yields decline as global equity rout sparks safety buying

    * Concerns about slowing global growth adds to bond bid
    * Bond market closed Thursday, closes early Friday

    By Karen Brettell
    NEW YORK, Nov 20 (Reuters) - Benchmark U.S. Treasury yields
fell to seven-week lows on Tuesday as global stock market
declines boosted demand for safe haven debt and on concerns
slowing global growth will complicate the Federal Reserve’s
plans to continue hiking interest rates.
    World stock markets fell as worries over softening demand
for the iPhone prompted a selloff by tech stocks, a day after a
tech-led weakness battered U.S. equity markets.             
    Italian government bond yields jumped to one-month highs,
pushed up by risk aversion on the sharp stock losses, tensions
over Britain’s exit from the European Union and concerns about
the Italian budget.             
    “The near-term guidance Treasuries are taking are from
broader risk assets, so they are certainly paying attention to
the fall in equities globally,” said Jon Hill, U.S. rates
strategist at BMO Capital Markets in New York.
    Fears about slowing global growth also boosted demand for
U.S. government bonds as investors contemplated how a slowdown
will impact further rate increases by the U.S. central bank.
    “The background for a lot of what’s going on is a
reassessment of the Fed’s path of policy as it relates to the
growing concern about global growth as well as a potential
recession going into 2020 and 2021,” Hill said.
    Richard Clarida, the Fed's newly appointed vice chair, on
Friday noted there was “some evidence of global slowing,” adding
“that's something that is going to be relevant as I think about
the outlook for the U.S. economy."             
    Fed Chairman Jerome Powell said last Wednesday that softness
in housing and high levels of corporate debt had caught the
Federal Reserve's eye, even as a "really strong" U.S. economy
was likely to continue growing.             
    New York Fed President John Williams on Monday said that the
U.S. central bank was pushing ahead with gradual rate-hike plans
next month as it marches toward a more normal policy stance.
    Benchmark 10-year notes             gained 3/32 in price to
yield 3.050 percent, after earlier dropping to 3.036 percent,
the lowest since Sept. 28.
    Two-year note yields           , which are highly sensitive
to interest rates, have fallen to 2.791 percent from 2.977
percent on Nov. 8, and are trading near their lowest levels
since Sept. 18.
    The bond market will be closed on Thursday for the
Thanksgiving holiday, and will close early on Friday.

 (Editing by Bernadette Baum)
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