March 6, 2018 / 2:26 PM / 7 months ago

TREASURIES-Yields rise with stocks as trade war fears ease

    * Fears about trade wars ease, boosting stocks
    * North Korean hopes reduce bond safety bid
    * Corporate bond hedging seen weighing on prices

    By Karen Brettell
    NEW YORK, March 6 (Reuters) - U.S. Treasury yields rose
slightly on Tuesday in line with higher stocks on optimism that
U.S. President Donald Trump may back down from proposed steel
and aluminum tariffs that have prompted concerns about a global
trade war.
    Top U.S. Republican politicians, including House of
Representatives Speaker Paul Ryan, on Monday urged Trump not to
go ahead with tariffs on foreign imports of steel and aluminum.
            
    Even though the president said he would not back down, he
suggested Canada and Mexico could be exempted if a new North
American Free Trade Agreement (NAFTA) was reached, which many
market participants see as the main motivation behind the plan.
    "It does seem as though Trump has laid out the fact that
he's using these tariffs as a negotiating tactic," said Gennadiy
Goldberg, an interest rate strategist at TD Securities in New
York, adding that bonds are "tracking equity sentiment."
    Benchmark 10-year notes             were last down 1/32 in
price to yield 2.88 percent, up from 2.87 percent on Monday.
    News that North and South Korea will hold their first summit
in more than a decade in late April also helped reduce demand
for safe-haven U.S. bonds.
    The head of a South Korean delegation that recently met with
North Korean leader Kim Jong Un revealed that North Korea said
there was no need to keep its nuclear program as long as there
was no military threat against it and that the country was open
to talking with the United States regarding denuclearization and
normalizing ties.             
    Hedging needs as CVS Health Corp announced a nine-part
corporate bond sale were also seen as weighing on bonds.
            
    The major economic focus this week will be Friday’s
employment report for February, which will be evaluated for
further signs of wage strength as an indicator of inflation.
    U.S. job growth surged in January and wages increased
further, recording their largest annual gain in more than 8-1/2
years, bolstering expectations that inflation will push higher
this year as the labor market hits full employment.             
    If January's wage growth is revised downward, however, that
could boost bond prices and reduce bullish expectations on how
many interest rate hikes the Federal Reserve will make this
year.
    "If you get a downward revision, it could temper some of
this market optimism about four rate hikes this year," said
Goldberg.

 (Editing by Jonathan Oatis)
  
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below