November 21, 2018 / 2:24 PM / 7 months ago

TREASURIES-Yields fall on disappointing data, Fed report

    * Capital goods orders disappoint
    * Fed may pause rate hikes in spring - report
    * Bond market closed on Thursday for Thanksgiving

    By Karen Brettell
    NEW YORK, Nov 21 (Reuters) - U.S. Treasury yields fell on
Wednesday after data showed that new orders for U.S.-made
capital goods were weaker than expected, and on a report that
the Federal Reserve may pause its rate increase cycle in the
first half of next year.
    Capital goods orders were unexpectedly unchanged in October
and shipments rebounded modestly, which could temper
expectations of an acceleration in business spending on
equipment early in the fourth quarter.
    The Commerce Department said that the flat reading in orders
for non-defense capital goods excluding aircraft, a closely
watched proxy for business spending plans, followed a downwardly
revised 0.5 percent decline in September.             
    “Durable goods was weaker than expected and revised lower
for September,” said Tom di Galoma, a managing director at
Seaport Global Holdings in New York.
    The bond rally came after an overnight selloff as higher
stock markets reduced demand for safe haven U.S. debt.
    Traders also cited a report by MNI saying that the Fed may
pause its rate hiking cycle as early as spring as supporting
    “There’s been some news reports that the Fed may hold off on
any king of further rate hikes in early spring, so I think the
market got a little excited about that in general because if
they do stop hiking, obviously that takes some extraordinary
pressure off rates,” di Galoma said.
    Slowing global growth has increased expectations that the
U.S. central bank will be unable to raise rates much further
without hurting the U.S. economy.
    Benchmark 10-year note yields             fell to 3.066
percent, after rising to 3.088 percent overnight.
    The Treasury Department will sell $11 billion in 10-year
Treasury Inflation-Protected Securities (TIPS) on Wednesday.
    Trading volumes are expected to decline before Thursday’s
Thanksgiving holiday, when the bond market will close. The
market will also close early on Friday.

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