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Gertrude Chavez-Dreyfuss

REFILE-TREASURIES-U.S. yields fall as Fed comments spark talk of rate hike end

17 Nov 2018

(In 6th paragraph, corrects name to Fox Business Network, not Fox Business News) * Fed's Clarida says interest rates nearing neutral level * Fed's Kaplan warns about slowing global growth-Fox interview * U.S. 30-year, 10-year, 2-year yields fall to 2-week lows By Gertrude Chavez-Dreyfuss NEW YORK, Nov 16 U.S. Treasury yields retreated on Friday after a top Federal Reserve official said U.S. interest rates are nearing the central bank's estimates of a neutral level, suggesting that the current tightening cycle may soon end. U.S. benchmark 10-year, 30-year, and two-year yields dropped to two-week lows, while yields on intermediate maturities - five-year and seven-year notes - tumbled to their lowest in two months. In a CNBC interview at the U.S. central bank's Washington headquarters on Friday, Fed Vice Chair Richard Clarida said the bank needs to be particularly data-dependent as rates are near the 2.5 percent to 3.5 percent "neutral" range that neither stimulates nor brakes economic growth. This was Clarida's first public comments since his confirmation by the Senate in August. "The big driver right now is Fed speech," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia. "Clarida indicated a modestly dovish bent on Fed policy, and not a particularly aggressive stance." In an interview with Fox Business Network on Friday, Dallas Fed President Robert Kaplan said the U.S. economy is stronger than he had thought but faces headwinds next year from weaker global economic conditions, as well as fading impact of President Donald Trump's tax reform. Chairman Jerome Powell on Wednesday also cited slowing global growth as an emerging concern among Fed officials as they debate how much further and how quickly to raise their short-term policy rate. "The one thing that is worth noting is that all three - Powell, Clarida, and Kaplan - referenced negative feedback from foreign economic conditions," Janney's LeBas said. "They also used fairly similar language that suggests the Federal Reserve is concerned about policy implications from global growth," he added. In afternoon trading, U.S. 10-year note yields fell as low as 3.066 percent, a two-week low, from 3.118 percent late Thursday. Yields were last at 3.077 percent. U.S. 30-year bond yields were down at 3.331 percent , from 3.366 percent on Thursday. Earlier in the session, 30-year yields dropped to two-week troughs of 3.323 percent. On the short end of the curve, U.S. two-year yields slid to a two-week trough of 2.804 percent, compared with Thursday's 2.862 percent. Two-year yields were last at 2.812 percent. Chris Ahrens, chief market strategist at First Empire Securities, said slower global growth will not delay the Fed's next tightening, expected next month. "But global growth could decelerate to the point where it reverberates into the domestic economy." Ahrens added that there is a potential downside break of an upside channel in 10-year yields, with a close below 3.05 percent exposing the 2.98 percent target. November 16 Friday 2:58PM New York / 1958 GMT Price Current Net Yield % Change (bps) Three-month bills 2.31 2.3552 -0.011 Six-month bills 2.44 2.5041 -0.011 Two-year note 100-30/256 2.8122 -0.050 Three-year note 100-12/256 2.8584 -0.055 Five-year note 99-236/256 2.8918 -0.053 Seven-year note 100-24/256 2.9848 -0.045 10-year note 100-112/256 3.0738 -0.044 30-year bond 100-224/256 3.3286 -0.037 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 19.50 0.00 spread U.S. 3-year dollar swap 17.00 -0.25 spread U.S. 5-year dollar swap 14.25 0.00 spread U.S. 10-year dollar swap 6.00 -0.25 spread U.S. 30-year dollar swap -11.00 -0.50 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama, Richard Chang and Steve Orlofsky)

UPDATE 1-Speculators cut net long U.S. dollar bets in latest week -CFTC, Reuters

17 Nov 2018

(Adds details, comment, byline, bitcoin futures) By Gertrude Chavez-Dreyfuss NEW YORK, Nov 16 Speculators trimmed net long bets on the U.S. dollar in the latest week, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. The value of the net long dollar position totaled $27.11 billion in the week ended Nov. 13, down from $28.66 billion the previous week. Speculators were net long on dollars for the 22nd straight week, after being short for 48 consecutive weeks. Net long dollar bets have fallen in three of the last five weeks. U.S. dollar positioning was derived from net contracts of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars. In a broader measure of dollar positioning that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the U.S. dollar posted a net long position valued at $27.895 billion, compared with $29.951 billion a week earlier. One of the factors that have driven the dollar's outperformance this year - the higher interest rate outlook - has been fading. Recent comments from U.S. Federal Reserve officials have been modestly dovish. Fed Vice Chair Richard Clarida on Friday said U.S. interest rates are nearing their neutral levels, suggesting the U.S. central bank's tightening cycle may be ending soon. Fed Chairman Jerome Powell on Wednesday and Dallas Fed President Robert Kaplan were similarly less upbeat, citing slowing global growth as a headwind to the U.S. economy. Kathy Lien, managing director of FX strategy at BK Asset Management in New York, said the Fed is still expected to raise interest rates next month, despite the concerns, but that rate hike could be accompanied by a less hawkish outlook. In the cryptocurrency market, speculators' net short position on bitcoin Cboe futures totaled -1,185 contracts in the latest week, from -1,221 contracts the previous week, data showed. Bitcoin on Friday was down 1.6 percent at $5,497.93 on the Bitstamp platform. It fell below a key $6,000 support level two days earlier and hit a one-year low on Thursday in what has been a prolonged market slump that began early this year. So far this year, bitcoin is down more than 60 percent after soaring over 1,300 percent in 2017. "To put it plainly, the dip is likely indicative of the fact that the most recent round of crypto speculators are capitulating," said Marshall Hayner, founder of payments company Metal Pay. "Thanks to revised short-term expectations that call into question the idea of a bull run by the end of the year, many are likely taking their chips off the table." Japanese Yen (Contracts of 12,500,000 yen) $11.236 billion Nov. 13, 2018 Prior week week Long 40,192 33,060 Short 142,486 122,182 Net -102,294 -89,122 EURO (Contracts of 125,000 euros) $5.224 billion Nov. 13, 2018 Prior week week Long 161,860 148,973 Short 198,879 195,816 Net -37,019 -46,843 POUND STERLING (Contracts of 62,500 pounds sterling) $3.819 billion Nov. 13, 2018 Prior week week Long 38,606 31,670 Short 85,713 88,469 Net -47,107 -56,799 SWISS FRANC (Contracts of 125,000 Swiss francs) $2.31 billion Nov. 13, 2018 Prior week week Long 15,841 16,747 Short 34,443 36,695 Net -18,602 -19,948 CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars) $0.211 billion Nov. 13, 2018 Prior week week Long 36,773 33,753 Short 39,564 36,385 Net -2,791 -2,632 AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars) $4.314 billion Nov. 13, 2018 Prior week week Long 18,800 20,825 Short 78,580 87,270 Net -59,780 -66,445 MEXICAN PESO (Contracts of 500,000 pesos) $-0.178 billion Nov. 13, 2018 Prior week week Long 69,888 67,588 Short 62,601 60,552 Net 7,287 7,036 NEW ZEALAND DOLLAR (Contracts of 100,000 New Zealand dollars) $1.411 billion Nov. 13, 2018 Prior week week Long 11,138 10,434 Short 32,006 36,160 Net -20,868 -25,726 (Reporting by Gertrude Chavez-Dreyfuss; editing by David Gregorio and G Crosse)

TREASURIES OUTLOOK-U.S. yields fall as Fed comments spark talk of rate hike end

17 Nov 2018

* Fed's Kaplan warns about slowing global growth -Fox interview

TREASURIES-U.S. yields slide after Fed's Clarida comments

16 Nov 2018

* Fed's Clarida says rates nearing neutral level * Fed's Kaplan, in Fox interview, warns about slowing global growth (Adds comments by analyst and Fed officials, table, byline; updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Nov 16 U.S. Treasury yields retreated on Friday after a top Federal Reserve official said U.S. interest rates are nearing the central bank's estimates of a neutral level, suggesting that the current tightening cycle may soon end. In a CNBC interview at the U.S. central bank's Washington headquarters, Fed Vice Chair Richard Clarida said he did not believe the Fed had raised rates too much or too quickly. But he noted that the Fed needs to be particularly data-dependent as rates near the 2.5 percent to 3.5 percent "neutral" range that neither stimulates nor brakes economic growth. U.S. two-year yields, the maturity most sensitive to rate expectations, dropped to two-week lows, while the benchmark 10-year yield fell to 3.018 percent, also a two-week low. "The big driver right now is Fed speech," said Guy LeBas, chief fixed income strategist, at Janney Montgomery Scott in Philadelphia. "Clarida's comments were the first public statement since being appointed vice chair. He indicated a modestly dovish bent on Fed policy, and not a particularly aggressive stance," he added. In an interview with Fox Business News on Friday, Dallas Fed President Robert Kaplan said the U.S. economy is stronger than he had thought but faces headwinds next year from weaker global economic conditions, as well as fading impact from President Donald Trump's tax reform. Chairman Jerome Powell on Wednesday had also cited slowing global growth as an emerging concern among Fed officials as they debate how much further and how quickly to raise their short-term policy rate. "The one thing that is worth noting that all three - Powell, Clarida, and Kaplan referenced negative feedback from foreign economic conditions," Janney's LeBas said. "They also used fairly similar language too that suggests that the Federal Reserve is concerned about policy implications from global growth," he added. In early trading, U.S. 10-year note yields fell as low as 3.081 percent, from 3.118 percent late Thursday. Yields were last at 3.084 percent. U.S. 30-year bond yields were down at 3.348 percent , from 3.366 percent on Thursday. On the short end of the curve, U.S. two-year yields slid to a two-week trough of 2.812 percent, compared with Thursday's 2.862 percent. November 16 Friday 11:16AM New York / 1616 GMT Price Current Net Yield % Change (bps) Three-month bills 2.315 2.3604 -0.006 Six-month bills 2.44 2.5041 -0.011 Two-year note 100-28/256 2.8164 -0.046 Three-year note 100-10/256 2.8612 -0.052 Five-year note 99-232/256 2.8953 -0.050 Seven-year note 100-16/256 2.9898 -0.040 10-year note 100-84/256 3.0865 -0.032 30-year bond 100-116/256 3.3509 -0.015 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 19.75 0.25 spread U.S. 3-year dollar swap 17.25 0.00 spread U.S. 5-year dollar swap 14.50 0.25 spread U.S. 10-year dollar swap 6.25 0.00 spread U.S. 30-year dollar swap -11.25 -0.75 spread (Reporting by Gertrude Chavez-Dreyfuss Editing by Chizu Nomiyama and Richard Chang)

TREASURIES-Prices rise on Brexit worries; focus on U.S. stocks

16 Nov 2018

* Brexit concerns push investors to bonds * U.S. yields fall to two week lows * U.S. economic data comes out mixed; Fed tightening intact (Recasts, adds new comments; updates table, prices in text) By Gertrude Chavez-Dreyfuss NEW YORK, Nov 15 U.S. Treasury prices drifted higher on Thursday, sending yields to two-week lows across the curve, as Britain's draft agreement to exit the European Union ran into trouble, prompting investors to seek the safety of government bonds. Yields came off their lows in the afternoon after the Financial Times reported that U.S. Trade Representative Robert Lighthizer has told some industry executives another round of tariffs on Chinese imports has been put on hold as the two nations pursue talks. A USTR spokesperson, however, denied the FT report. U.S. stocks, which had been in the red for most of the day, rallied on the FT news, notwithstanding the denial, helping Treasury yields limit their fall. "We're really just watching risk sentiment here," said Gennadiy Goldberg, interest rates strategist, at TD Securities in New York. "The market was in a risk-off mode heading into the early part of the day just because of Brexit. But we did get potentially positive trade headlines and that helped stocks recover," he added. Brexit and its many twists and turns remained a concern, however. Days after drafting a divorce deal, Britain's exit from the EU took a turn for the worse after Prime Minister Theresa May's Brexit secretary and other ministers quit in protest as euro-skeptic lawmakers stepped up efforts to oust her. "It is becoming painfully apparent how very uncertain the future looks," said John Taylor, president of macro research firm Taylor Global Vision in New York. "A change of government, or No Deal, or No Brexit are now quite possible. The market has been mistakenly optimistic about what is to come from Brexit," he added. The U.S. Treasuries' 10-year interest rate premium over British government bonds rose to its highest since mid-1984, with the spread widening to 174 basis points, a level last seen in June 1984, according to data from Refinitiv. Global factors overshadowed Thursday's U.S. economic data, which were mixed. Those numbers though should keep the Federal Reserve on track to raise interest rates multiple times starting in December. The data was led by U.S. retail sales, which rose 0.8 percent in October. Excluding automobiles, gasoline, building materials and food services, retail sales increased 0.3 percent last month, lower than expected. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. In afternoon trading, benchmark 10-year Treasury note yields fell to 3.11 percent, from 3.12 percent late on Wednesday. U.S. 30-year yields, however, edged up to 3.36 percent , compared with Wednesday's 3.355 percent. On the short end of the curve, U.S. two-year yields slipped to 2.858 percent, from 2.862 percent on Wednesday. November 15 Thursday 3:39PM New York / 2039 GMT Price Current Net Yield % Change (bps) Three-month bills 2.32 2.3659 -0.010 Six-month bills 2.45 2.515 -0.005 Two-year note 100-8/256 2.858 -0.004 Three-year note 99-234/256 2.9051 -0.014 Five-year note 99-184/256 2.9362 -0.016 Seven-year note 99-222/256 3.0212 -0.016 10-year note 100-32/256 3.1103 -0.010 30-year bond 100-72/256 3.36 0.005 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 19.50 0.50 spread U.S. 3-year dollar swap 17.00 0.50 spread U.S. 5-year dollar swap 14.25 0.25 spread U.S. 10-year dollar swap 6.25 0.25 spread U.S. 30-year dollar swap -10.50 0.00 spread (Reporting by Gertrude Chavez-Dreyfuss, Editing by Bernadette Baum)

TREASURIES-Prices rise as Brexit turmoil, weak stocks spark safe-haven bid

15 Nov 2018

* Brexit worries push investors to bonds * U.S. yields fall to two week lows * U.S. economic data comes out mixed; Fed tightening intact (Adds comment, byline, table, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Nov 15 U.S. Treasury prices rose on Thursday, sending yields to two-week lows across the curve, as concerns about a weak stock market and Britain's exit from the European Union prompted investors to seek the safety of government bonds. "There are just too many things going wrong at the moment. People are scrambling for safety here," said Stan Shipley, fixed-income strategist at Evercore ISI in New York. Days after drafting a divorce deal, Britain's exit from the EU took a turn for the worse after Prime Minister Theresa May's Brexit secretary and other ministers quit in protest as euro-skeptic lawmakers stepped up efforts to oust her. Consequently, the U.S. Treasuries' 10-year interest rate premium over British government bonds rose to its highest since mid-1984. The spread separating the benchmark 10-year gilt from its higher-yielding U.S. equivalent widened to 174 basis points, a level last seen in June 1984, according to data from Refinitiv. "Even though I and the chief economist here and really most economists see no sign of recession any time soon, investors are more concerned than we are," Shipley said. "They're seeing lower oil prices, which is a sign of weak global demand, they're seeing Brexit problems, and as a consequence those credit spreads are rising rapidly." Widening credit spreads reflect anxiety in the market. U.S. stocks were down again on Thursday, led by a slide in growth stocks including Facebook and Amazon.com Inc . U.S. crude futures recovered on Thursday, but had plunged 7 percent on Tuesday, down from a four-year high only a month ago. Tuesday marked a 12th straight session of declines, the longest losing streak on record, shaking a market that was bracing for supply shortfalls just a month ago. Global factors overshadowed Thursday's slew of U.S. economic data, which came out mixed, but should keep the Federal Reserve on track to raise interest rates multiple times starting in December. U.S. retail sales were up 0.8 percent in October, but excluding automobiles, gasoline, building materials and food services, retail sales increased 0.3 percent last month, lower than expected. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. The other economic numbers such as U.S. jobless claims were weaker than expected, while import prices rose more than forecast, but underlying imported inflation pressures remained tame amid a strong dollar. In mid-morning trading, benchmark 10-year Treasury note yields fell to 3.092 percent, from 3.12 percent late on Wednesday. U.S. 30-year yields dropped to 3.341 percent, compared with Wednesday's 3.355 percent. On the short end of the curve, U.S. two-year yields declined to 2.837 percent, from 2.862 percent on Wednesday. November 15 Thursday 10:29AM New York / 1529 GMT Price Current Net Yield % Change (bps) Three-month bills 2.33 2.3762 0.000 Six-month bills 2.45 2.515 -0.005 Two-year note 100-16/256 2.8415 -0.020 Three-year note 99-248/256 2.8859 -0.033 Five-year note 99-206/256 2.9174 -0.035 Seven-year note 99-248/256 3.0049 -0.032 10-year note 100-72/256 3.0921 -0.028 30-year bond 100-148/256 3.3443 -0.011 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 19.25 0.25 spread U.S. 3-year dollar swap 17.00 0.50 spread U.S. 5-year dollar swap 14.25 0.25 spread U.S. 10-year dollar swap 6.25 0.25 spread U.S. 30-year dollar swap -11.00 -0.50 spread (Reporting by Gertrude Chavez-Dreyfuss, Editing by Bernadette Baum)

TREASURIES-U.S. yields slide as Wall Street shares retreat

15 Nov 2018

* U.S. 30-, 10-, 2-year yields fall to 2-week lows * U.S. headline CPI rises in Oct; core CPI in line with forecast * Wall Street shares fall, drag yields lower (Adds comment, updates prices, table) By Gertrude Chavez-Dreyfuss NEW YORK, Nov 14 U.S. Treasury yields fell on Wednesday, as investors fretted about renewed weakness on Wall Street, which could signal much deeper problems in the world's largest economy. U.S. 30-year, 10-year, and two-year yields dropped to two-week lows. Yields rallied earlier, bolstered by early gains in U.S. stocks and continued optimism about Britain's exit from the European Union. But the direction has since changed, as U.S. stock indexes fell, with Apple Inc leading a decline in technology stocks. The S&P 500 index also dropped for a fifth session in a row, led by financials. "There is more thought that maybe there is something more to the stock market's weakness, that maybe it's starting to signal something about the economy, rather than just it being about trading or moving positions around," said Lou Brien, market strategist at DRW Trading in Chicago. In afternoon trading, benchmark 10-year Treasury note yields fell to 3.117 percent, from 3.145 percent late on Tuesday. Ten-year yields earlier dropped to a two-week low of 3.092 percent. "U.S. Treasury yields are finally breaking lower to reflect distress in other markets that started Monday," said Jim Vogel, interest rates strategist at FTN Financial in Memphis, Tennessee. "The build-up of two-way flows at 3.155 percent on 10s forced today's buyers to crack the 3.13 percent barrier that immediately gave way to 3.125 percent to rebalance technicals," he added. U.S. 30-year yields slipped to 3.350 percent, after earlier sliding to a two-week trough of 3.334 percent, compared with Tuesday's 3.367 percent. On the short end, U.S. two-year yields fell to a two-week low of 2.837 percent, down from 2.895 percent on Tuesday. Two-year yields were last at 2.862 percent. Yields earlier gained some support from in-line U.S. core inflation data for October, which should keep the Federal Reserve firmly on track to raise interest rates next month and a few more times in 2019. Data showed on Wednesday that the U.S. consumer price index rose 0.3 percent last month after edging up 0.1 percent in September. October's rise was the largest in nine months amid gains in the cost of gasoline and rents. Excluding the volatile food and energy components, CPI climbed 0.2 percent, after the so-called core CPI had gained 0.1 percent for two straight months. Andrew Hunter, U.S. economist at Capital Economics in London, said despite the rise in prices, the rest of the CPI report "supports our view that underlying inflation is unlikely to rise much further." Hunter noted that the Fed will still likely continue hiking rates once a quarter in the near term, with the next move coming in December, but Fed officials won't hesitate to back away from further tightening if economic growth slows. November 14 Wednesday 3:48PM New York / 2048 GMT Price Current Net Yield % Change (bps) Three-month bills 2.33 2.3764 -0.005 Six-month bills 2.4575 2.523 -0.008 Two-year note 100-6/256 2.8622 -0.033 Three-year note 99-224/256 2.9188 -0.033 Five-year note 99-168/256 2.9498 -0.037 Seven-year note 99-200/256 3.035 -0.033 10-year note 100-20/256 3.1158 -0.029 30-year bond 100-112/256 3.3518 -0.015 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 19.00 0.25 spread U.S. 3-year dollar swap 16.25 0.00 spread U.S. 5-year dollar swap 14.00 0.75 spread U.S. 10-year dollar swap 6.25 0.50 spread U.S. 30-year dollar swap -10.50 -0.25 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrea Ricci and James Dalgleish)

Bitcoin drops to one-year low as slump persists; ethereum down sharply

15 Nov 2018

NEW YORK/LONDON Bitcoin fell to a more than one-year low on Wednesday, breaching a key support level of $6,000 and causing a wave of selling in the digital currency and other crypto assets in what has been a prolonged market slump that began early this year.

TREASURIES-U.S. yields turn lower as Wall Street falls

14 Nov 2018

* U.S. 10-year, 2-year yields fall to 2-week lows * U.S. headline CPI rises in Oct; core CPI in line with forecast * Wall Street shares fall, drags yields lower (Recasts, adds comment, updates prices, table) By Gertrude Chavez-Dreyfuss NEW YORK, Nov 14 U.S. Treasury yields reversed course and fell on Wednesday, as investors fretted that renewed weakness on Wall Street could be signaling much deeper problems in the world's largest economy. U.S. benchmark 10-year and two-year yields dropped to two-week troughs, while the 30-year yield hit the day's lows. Earlier in the session, yields rallied, bolstered by earlier gains in U.S. stocks and continued optimism about Britain's exit from the European Union. But the direction has since changed, as U.S. stock indexes fell, with Apple Inc leading a decline in technology stocks. "There is more thought that maybe there is something more to the stock market's weakness, that maybe it's starting to signal something about the economy, rather than just it being about trading or moving positions around," said Lou Brien, market strategist at DRW Trading in Chicago. "The long end, in particular, will be very much attuned to stock market movements," he added. In midday trading, benchmark 10-year note yields fell to 3.123 percent, from 3.145 percent late on Tuesday. Ten-year yields earlier dropped to a two-week low of 3.121 percent. U.S. 30-year yields slipped to 3.356 percent compared with Tuesday's 3.367 percent. On the short end of the curve, U.S. two-year yields fell to a two-week low of 2.871 percent, down from 2.895 percent on Tuesday. Yields earlier gained some support from in-line U.S. core inflation data for October, which should keep the Federal Reserve firmly on track to raise interest rates next month and a few more times in 2019. Data showed on Wednesday that the U.S. consumer price index rose 0.3 percent last month after edging up 0.1 percent in September. October's rise was the largest in nine months amid gains in the cost of gasoline and rents. Excluding the volatile food and energy components, CPI climbed 0.2 percent. The so-called core CPI had gained 0.1 percent for two straight months. Andrew Hunter, U.S. economist at Capital Economics in London, said the rebound in headline CPI was mostly driven by a rise in gasoline prices, which will be more than reversed over the next couple of months with the decline in oil prices. "The rest of the report supports our view that underlying inflation is unlikely to rise much further from here," he added. That said, Hunter noted that the Fed will still likely continue hiking interest rates once a quarter in the near term, with the next move coming in December. "But with little sign that a more marked acceleration in inflation lies ahead, Fed officials won't hesitate to back away from further tightening if economic growth slows." November 14 Wednesday 12:36PM New York / 1736 GMT Price Current Net Yield % Change (bps) Three-month bills 2.335 2.3815 0.000 Six-month bills 2.455 2.5204 -0.011 Two-year note 100-2/256 2.8705 -0.024 Three-year note 99-222/256 2.9216 -0.030 Five-year note 99-162/256 2.955 -0.032 Seven-year note 99-196/256 3.0375 -0.031 10-year note 100-8/256 3.1213 -0.024 30-year bond 100-96/256 3.3551 -0.012 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 18.75 0.00 spread U.S. 3-year dollar swap 16.50 0.25 spread U.S. 5-year dollar swap 14.00 0.75 spread U.S. 10-year dollar swap 6.25 0.50 spread U.S. 30-year dollar swap -10.25 0.00 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrea Ricci)

TREASURIES-U.S. yields rise on Wall street gains, Brexit optimism

14 Nov 2018

* U.S. headline CPI rises in Oct; core CPI in line with forecast * Wall Street shares rise, boosting yields * Brexit deal gains positive momentum (Adds comment, details, table, byline) By Gertrude Chavez-Dreyfuss NEW YORK, Nov 14 U.S. benchmark 10-year Treasury yields rallied from two-week lows on Wednesday, bolstered by gains on Wall Street and continued optimism about Britain's exit from the European Union. Yields on other maturities also rose, with a little help from in-line U.S. core inflation data for October. That should keep the Federal Reserve firmly on track to raise interest rates next month and a few more times in 2019. On Wednesday, U.S. stocks traded higher, further moving away from Monday's steep losses, as a rebound in oil prices lifted energy stocks. "To me, it's equities turning higher as well as positive momentum on Brexit that are giving some room for Treasury yields to rise," said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York. A draft Bexit deal was struck on Tuesday after months of negotiations with the EU, but British Prime Minister Theresa May must get the agreement approved by parliament before leaving the bloc on March 29, 2019. In morning trading, benchmark 10-year note yields rose to 3.154 percent, from 3.145 percent late on Tuesday. Ten-year yields earlier fell to a two-week low of 3.132 percent. U.S. 30-year yields climbed to 3.385 percent compared with Tuesday's 3.367 percent. On the short end of the curve, U.S. two-year yields were at 2.895 percent, unchanged from Tuesday. Yields also got a modest boost from data showing the U.S. consumer price index increased by 0.3 percent last month after edging up 0.1 percent in September. October's rise was the most in nine months amid gains in the cost of gasoline and rents. Excluding the volatile food and energy components, CPI climbed 0.2 percent. The so-called core CPI had gained 0.1 percent for two straight months. Andrew Hunter, U.S. economist at Capital Economics in London, said the rebound in headline CPI was mostly driven by a rise in gasoline prices, which will be more than reversed over the next couple of months with the decline in oil prices. "The rest of the report supports our view that underlying inflation is unlikely to rise much further from here," he added. That said, Hunter noted that the Fed will still likely continue hiking interest rates once a quarter in the near term, with the next move coming in December. "But with little sign that a more marked acceleration in inflation lies ahead, Fed officials won't hesitate to back away from further tightening if economic growth slows," he said. November 14 Wednesday 10:28AM New York / 1528 GMT Price Current Net Yield % Change (bps) Three-month bills 2.335 2.3815 0.000 Six-month bills 2.465 2.5308 0.000 Two-year note 99-246/256 2.8953 0.000 Three-year note 99-200/256 2.9517 0.000 Five-year note 99-124/256 2.9875 0.000 Seven-year note 99-140/256 3.0727 0.005 10-year note 99-192/256 3.1543 0.009 30-year bond 99-204/256 3.3858 0.019 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 18.75 0.00 spread U.S. 3-year dollar swap 16.50 0.25 spread U.S. 5-year dollar swap 13.75 0.50 spread U.S. 10-year dollar swap 6.00 0.25 spread U.S. 30-year dollar swap -10.50 -0.25 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Jeffrey Benkoe)

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