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Gertrude Chavez-Dreyfuss

TREASURIES-U.S. yields sink on persistent U.S.-China trade issue, Brexit

12:42am IST

(Adds Fed minutes, new comment, updated prices) By Gertrude Chavez-Dreyfuss NEW YORK, May 22 U.S. Treasury yields fell on Wednesday, pressured by worsening trade tensions between the United States and China after a media report said the Trump government is considering limits to Chinese video surveillance firm Hikvision's ability to buy American technology. Investors were also spooked by developments in Britain's troubled attempt to exit the European Union, fueling declines in U.S. long-dated yields after hitting one-week highs the previous session. Even the Federal Reserve's minutes of its last monetary policy failed to take the spotlight from the U.S.-China trade conflict and Brexit. As expected, the Fed minutes released on Wednesday showed no surprises. Over the last few days, the U.S.-China trade saga has been front and center of bond investors' radar. The New York Times reported late Tuesday that the U.S. Commerce Department may require that U.S. companies obtain government approval to supply components to Hikvision, limiting the company's access to technology that helps power its equipment. That came after Washington on Tuesday temporarily eased curbs against Chinese telecommunications equipment maker Huawei Technologies . Overall, analysts believe the United States has the upper hand in its trade war with the world's second largest economy. "Some have suggested that China will deliberately deplete its holdings of Treasuries in order to hit back at the U.S. if it ratchets up their trade war," said John Higgins, chief markets economist at Capital Economics "Even if this happened though, we suspect that the temporary downside for Treasuries would ultimately be trumped by the upside from an escalation of their dispute," he added. Aside from China, UK worries continued to help boost U.S. bond prices, after Prime Minister Theresa May's final ploy to win support for her Brexit plan failed to win over either opposition lawmakers or many in her own party. May further resisted growing calls to resign on Wednesday, vowing to press on despite mounting opposition from lawmakers and even some of her own ministers to her latest Brexit gambit. In afternoon trading, U.S. 10-year note yields fell to 2.39% from 2.426% late on Tuesday. Yields on U.S. 30-year bonds slid to 2.815% from 2.842% on Tuesday. On the short end of the curve, U.S. 2-year yields were down at 2.228% from Tuesday's 2.258%. The Fed minutes released Wednesday afternoon failed to generate excitement for investors, although one analyst said the comments were on the hawkish side. Eric Stein, co-director of global income group at Eaton Vance Management in Boston said the re-escalation in the trade tension between U.S. and China could change the Fed's outlook. "On the other hand, for those looking for a rate cut, they would be disappointed because they signaled they are on hold until things change. If the trade war doesn’t get worse, U.S. yields should eventually go back up." Wednesday, May 22 at 1457 EDT (1857 GMT): Price Current Net Yield % Change (bps) Three-month bills 2.325 2.3712 -0.022 Six-month bills 2.34 2.4075 -0.010 Two-year note 100-9/256 2.231 -0.027 Three-year note 99-222/256 2.1712 -0.030 Five-year note 100-70/256 2.1911 -0.037 Seven-year note 100-148/256 2.2843 -0.039 10-year note 99-212/256 2.3944 -0.032 30-year bond 101-36/256 2.8184 -0.024 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 5.50 0.25 spread U.S. 3-year dollar swap 4.25 0.50 spread U.S. 5-year dollar swap 1.00 0.50 spread U.S. 10-year dollar swap -4.75 0.25 spread U.S. 30-year dollar swap -28.00 0.00 spread (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Richard Leong: Editing by Susan Thomas and Chizu Nomiyama)

TREASURIES-U.S. yields slide on nagging U.S.-China trade issue, Brexit

22 May 2019

By Gertrude Chavez-Dreyfuss NEW YORK, May 22 U.S. Treasury yields fell on Wednesday, weighed down by worsening trade tensions between the United States and China after a media report that the Trump administration is considering limits to Chinese video surveillance firm Hikvision's ability to buy American technology. Investors were also spooked by developments in Britain's troubled attempt to exit the European Union, fueling declines in U.S. long-dated yields after hitting one-week highs the previous session. That said, the Federal Reserve will take center stage later on Wednesday when it releases the minutes of its latest monetary policy meeting. Analysts though do not expect surprises from the minutes. But over the last few days, the U.S.-China trade saga has been at the front and center of bond investors' radar. The New York Times reported late on Tuesday, citing people familiar with the matter, that the U.S. Commerce Department may require that U.S. companies obtain government approval to supply components to Hikvision, limiting the company's access to technology that helps power its equipment. That came after Washington temporarily eased curbs against Chinese telecommunications equipment maker Huawei Technologies . "These days we have been trading a lot on headline risks and right now, we see renewed trade concerns with China," said Justin Lederer, Treasury trader at Cantor Fitzgerald in New York. The Chinese government's top diplomat, Wang Yi, said on Wednesday that U.S. pressure on Chinese firms such as Huawei is economic bullying and a move to try to prevent the country's development process. Aside from China, UK worries continued to help boost U.S. bond prices after Prime Minister Theresa May's final ploy to win support for her Brexit plan failed to win over either opposition lawmakers or many in her own party. In late morning trading, U.S. 10-year note yields fell to 2.398% from 2.426% late on Tuesday. Yields on U.S. 30-year bonds slid to 2.818% from 2.842% on Tuesday. On the short end of the curve, U.S. 2-year yields were down at 2.228% from Tuesday's 2.258%. With China and Brexit in the background, the Fed minutes will be scrutinized for clues about where U.S. interest rates are headed. Jim Vogel, senior rates strategist, at FTN Financial in Memphis, Tennessee said given higher rates that followed Fed Chairman Jerome Powell's podium appearance three weeks ago, investors will be on alert for discussions or disagreements that might dent the "no insurance cut" takeaway that started rates higher. But if the Fed stands pat, "look for a flatter curve with firmer prices just past the 5-year," Vogel said. May 22 Wednesday 10:35 AM New York / 1435 GMT Price Current Net Yield % Change (bps) Three-month bills 2.33 2.3764 -0.017 Six-month bills 2.35 2.4179 0.000 Two-year note 100-8/256 2.233 -0.025 Three-year note 99-218/256 2.1766 -0.024 Five-year note 100-62/256 2.1978 -0.030 Seven-year note 100-136/256 2.2916 -0.031 10-year note 99-204/256 2.398 -0.028 30-year bond 101-36/256 2.8184 -0.024 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 5.75 0.50 spread U.S. 3-year dollar swap 4.25 0.50 spread U.S. 5-year dollar swap 1.00 0.50 spread U.S. 10-year dollar swap -4.75 0.25 spread U.S. 30-year dollar swap -28.00 0.00 spread (Reporting by Gertrude Chavez-Dreyfuss Editing by Susan Thomas)

TREASURIES-U.S. yields climb as stocks gain on Huawei news

22 May 2019

* U.S. existing home sales fall * U.S. eases trade restrictions on Huawei * Markets pare back U.S. rate cut outlook (New throughout, updates prices, market activity and comments) By Gertrude Chavez-Dreyfuss NEW YORK, May 21 U.S. Treasury yields edged higher on Tuesday, lifted by gains on Wall Street and higher overall risk appetite after the United States eased trade restrictions on Chinese telecommunications equipment maker Huawei Technologies. The move helped calm fears of escalating trade tensions between the United States and China, analysts said. Federal Reserve officials made comments suggesting the U.S. economy was more stable than many had thought, even with the trade war. This reduced expectations of a near-term interest rate cut, which fed selling on the short-end of the curve. U.S. two-year yields hit two-week highs. Yields on U.S. benchmark 10-year notes and 30-year bonds climbed to one-week peaks after Washington temporarily relaxed trade restrictions on China's Huawei. Last week, the U.S. Commerce Department blocked Huawei from buying U.S. goods, citing national security. "Everything seems to be predicated on the next developments with the trade talk," said Karissa McDonough, fixed income strategist, at People's United Advisors in Burlington, Vermont. "There has been some reprieve in terms of the technology tariffs, but a reprieve does necessarily mean we have made substantial progress." In late trading, U.S. 10-year note yields rose to 2.429% from 2.414% late on Monday, after hitting a one-week high of 2.435%. Yields on U.S. 30-year bonds advanced to 2.843% from 2.835% on Monday. The session high was a one-week high of 2.849%. On the short end of the curve, U.S. 2-year yields rose to 2.26% from Monday's 2.223%. Boston Fed President Eric Rosengren said he did not expect the trade issue will require looser U.S. monetary policy. This assuaged some concerns about the possibility of a rate cut this year. "The rate cut outlook has been modestly lower," said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York. "We were pricing in a 65 percent possibility of a rate cut by October and now that's down to 50 percent." Yields briefly slipped after data showed U.S. home sales unexpectedly fell in April amid persistent weakness in the lower-priced segment. Data showed existing home sales fell 0.4% to a seasonally-adjusted annual rate of 5.19 million units last month. March's sales pace was unrevised at 5.21 million units. May 21 Tuesday 3:24 PM New York / 1924 GMT Price Current Net Yield % Change (bps) Three-month bills 2.34 2.3868 -0.004 Six-month bills 2.35 2.4179 0.005 Two-year note 99-251/256 2.26 0.037 Three-year note 99-196/256 2.2066 0.033 Five-year note 100-22/256 2.2314 0.028 Seven-year note 100-80/256 2.3259 0.022 10-year note 99-132/256 2.4299 0.016 30-year bond 100-160/256 2.8439 0.009 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 5.25 -0.50 spread U.S. 3-year dollar swap 3.75 -0.25 spread U.S. 5-year dollar swap 0.50 -0.25 spread U.S. 10-year dollar swap -5.00 0.00 spread U.S. 30-year dollar swap -27.75 0.25 spread (Reporting by Gertrude Chavez-Dreyfuss Editing by Paul Simao and David Gregorio)

TREASURIES-U.S. yields rise as stocks advance on Huawei news

21 May 2019

By Gertrude Chavez-Dreyfuss NEW YORK, May 21 U.S. Treasury yields edged higher on Tuesday, lifted by gains in Wall Street shares and higher risk appetite overall after the United States eased trade restrictions on Chinese telecommunications equipment maker Huawei Technologies. The move was a step in the right direction in terms of calming escalating trade tensions between the United States and China, analysts said. The United States on Tuesday temporarily eased trade restrictions on China's Huawei to minimize disruption for its customers. The U.S. Commerce Department blocked Huawei from buying U.S. goods last week, saying the firm was involved in activities contrary to national security. Yields on U.S. benchmark 10-year notes and 30-year bonds rose to one-week highs on Tuesday, while those on two-year notes hit two-week peaks. "This is partly optimism in equities causing a reversal of the moves we saw last week," said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York, as well as a reduction in the markets' rate cut forecasts. "There's optimism about progress in the ongoing U.S.-China trade talks," she added. In mid-morning trading, U.S. 10-year note yields rose to 2.426%, up from 2.414% late on Monday, after earlier hitting a one-week high of 2.435%. Yields on U.S. 30-year bonds advanced as well to 2.842% , up from 2.835% on Monday. Earlier in the session, 30-year yields touched one-week highs of 2.849%. On the short end of the curve, U.S. 2-year yields were up at 2.245%, compared with Monday's 2.223%. U.S. yields, however, briefly slipped after U.S. home sales unexpectedly fell in April amid persistent weakness in the lower-priced segment of the market. The National Association of Realtors said on Tuesday existing home sales fell 0.4% to a seasonally-adjusted annual rate of 5.19 million units last month. March's sales pace was unrevised at 5.21 million units. But Jon Hill, U.S. rates strategist at BMO Capital Markets in New York, said details of the housing report showed a much healthier picture. He cited gains in condominium and co-op sales and smaller declines in existing home sales compared to the previous month. "All in all, another solid read on the housing market that is consistent with the narrative of stabilization, rebound in the sector," he said. May 21 Tuesday 10:43AM New York / 1443 GMT Price Current Net Yield % Change (bps) Three-month bills 2.34 2.3868 -0.004 Six-month bills 2.345 2.4127 0.000 Two-year note 100-2/256 2.2455 0.023 Three-year note 99-204/256 2.1957 0.022 Five-year note 100-32/256 2.223 0.020 Seven-year note 100-88/256 2.321 0.017 10-year note 99-140/256 2.4264 0.012 30-year bond 100-164/256 2.8431 0.008 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 5.75 0.00 spread U.S. 3-year dollar swap 4.00 0.00 spread U.S. 5-year dollar swap 0.75 0.00 spread U.S. 10-year dollar swap -4.75 0.25 spread U.S. 30-year dollar swap -28.00 0.00 spread (Reporting by Gertrude Chavez-Dreyfuss Editing by Paul Simao)

TREASURIES-U.S. yields rise in choppy trading; U.S.-China trade in focus

21 May 2019

(Adds comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, May 20 U.S. Treasury yields rose on Monday, but traded within narrow ranges, reversing course in the afternoon session, as risk appetite improved somewhat despite continuing trade tension between the United States and China. Volume was generally light, with very little economic data this week and traders eyeing Friday's early close for Memorial Day weekend. "It's Monday and we're going into a holiday weekend, so liquidity is a little bit less," said Wen Lu, interest rates and volatility strategist at TD Securities in New York. He also cited Federal Reserve officials who spoke on Monday, especially St. Louis Fed President James Bullard, who had positive things to say about the U.S. economy. Bullard said trade tensions with China need to linger for an extended period to cause real damage to the United States economy. "The key takeaway from the Fed officials today is that the world is going to be just fine," Lu said. On Monday, however, China accused the United States of harboring "extravagant expectations" for a trade deal, underlining the gulf between the two sides as U.S. action against China's technology giant Huawei began hitting the global tech sector. "Right now with all the trade fears going on, everybody is rushing to safety here," said Stan Shipley, fixed income strategist at Evercore ISI in New York. "If you look at economic data, it looks fine in the U.S. and elsewhere too, but people are very worried about the tariff battle here." In late trading, U.S. 10-year note yields rose to 2.413% , down from 2.393% late on Friday. Yields on U.S. 30-year bonds were also higher at 2.831% , down from 2.824% on Friday. On the short end of the curve, however, U.S. 2-year yields were up at 2.220%, compared with Friday's 2.202%. Analysts said the U.S. economy is not nearing recession, but the risk increases if the trade war with China escalates further. "We've long maintained that the economic expansion's greatest vulnerability comes in the form of a spike in uncertainty leading businesses to scale back spending plans," said BMO Capital Markets in a research note "This eventually risks flowing through to the labor market as hiring slows, thereby undermining consumer confidence and spending. Hence, a recession is born." BMO said it is too soon for this scenario to happen, although recent soft U.S. retail sales figures contradicted Fed Chairman Jerome Powell's stance that the first quarter's weak consumption was temporary. In a week with few economic reports on the schedule, the highlight is Wednesday's release of the minutes of the Fed's last monetary policy meeting. Analysts, however, do not expect surprises from the minutes. May 20 Monday 3:28 PM New York / 1928 GMT Price Current Net Yield % Change (bps) Three-month bills 2.33 2.3756 -0.017 Six-month bills 2.345 2.4119 -0.010 Two-year note 100-14/256 2.2207 0.019 Three-year note 99-222/256 2.1711 0.022 Five-year note 100-58/256 2.2012 0.023 Seven-year note 100-120/256 2.3014 0.024 10-year note 99-172/256 2.4122 0.019 30-year bond 100-228/256 2.8307 0.007 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 5.75 -0.50 spread U.S. 3-year dollar swap 3.75 -0.75 spread U.S. 5-year dollar swap 0.75 -0.25 spread U.S. 10-year dollar swap -5.00 -0.25 spread U.S. 30-year dollar swap -28.00 0.25 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrea Ricci and Jonathan Oatis)

TREASURIES-Yields drift lower on ongoing U.S.-China trade tension

20 May 2019

By Gertrude Chavez-Dreyfuss NEW YORK, May 20 U.S. Treasury yields slipped on Monday, with long-dated debt falling for a second straight session and Wall Street stocks weaker, as risk appetite diminished amid ongoing trade tension between the United States and China. Volume was generally light, with very little economic data this week and traders eyeing Friday's early close for Memorial Day weekend. On Monday, China accused the United States of harboring "extravagant expectations" for a trade deal, underlining the gulf between the two sides as U.S. action against China's technology giant Huawei began hitting the global tech sector. "Right now with all the trade fears going on, everybody is rushing to safety here," said Stan Shipley, fixed income strategist at Evercore ISI in New York. "If you look at economic data, it looks fine in the U.S. and elsewhere too, but people are very worried about the tariff battle here." In mid-morning trading, U.S. 10-year note yields slipped to 2.389%, down from 2.393% late on Friday. Yields on U.S. 30-year bonds were also lower at 2.814% , down from 2.824% on Friday. On the short end of the curve, however, U.S. 2-year yields were slightly up at 2.206%, compared with Friday's 2.202% . Analysts said a U.S. economy is not nearing recession, but the risk increases if the trade war with China escalates further. "We've long maintained that the economic expansion's greatest vulnerability comes in the form of a spike in uncertainty leading businesses to scale back spending plans," said BMO Capital Markets in a research note "This eventually risks flowing through to the labor market as hiring slows, thereby undermining consumer confidence and spending. Hence, a recession is born." BMO said it's too soon for this scenario to happen, although recent soft U.S. retail sales figures contradicted Federal Reserve Chairman Jerome Powell's stance that the first quarter's weak consumption was temporary. In a week with few economic reports on the schedule, the highlight is the release on Wednesday of the minutes of the Fed's last monetary policy meeting. Analysts, however, do not expect surprises from the minutes. May 20 Monday 9:54AM New York / 1354 GMT Price !RIC {UScv1} is invalid !RIC !RIC {UScv1} is {UScv1} invalid is invalid !RIC {TYcv1} is invalid !RIC !RIC {TYcv1} is {TYcv1} invalid is invalid Price Current Net Yield % Change (bps) Three-month bills 2.335 2.3807 -0.012 Six-month bills 2.34 2.4067 -0.015 Two-year note 100-21/256 2.2063 0.004 Three-year note 99-238/256 2.1494 0.000 Five-year note 100-86/256 2.1778 0.000 Seven-year note 100-160/256 2.2771 0.000 10-year note 99-224/256 2.3891 -0.004 30-year bond 101-52/256 2.8153 -0.009 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 5.50 -0.75 spread U.S. 3-year dollar swap 4.00 -0.50 spread U.S. 5-year dollar swap 0.75 -0.25 spread U.S. 10-year dollar swap -5.25 -0.50 spread U.S. 30-year dollar swap -28.50 -0.25 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrea Ricci)

Bitcoin tops $8,000 as it hits highest since July 2018

14 May 2019

NEW YORK Bitcoin surged to more than $8,000 late on Monday, its highest level since July last year, as the cryptocurrency's rally gained further momentum.

Foreign investors flock to U.S. corporate bond market for yield

13 May 2019

NEW YORK Foreign investors have had to pay up to hedge U.S. dollar-denominated assets over the last year, but this has yet to stop them from plowing money into the U.S. corporate bond market, the world's largest.

U.S. investor awarded $75 million in cryptocurrency crime case

11 May 2019

NEW YORK U.S. entrepreneur and cryptocurrency investor Michael Terpin won $75.8 million in a civil judgment against a 21-year-old man who Terpin said was part of a scheme that defrauded him of digital currencies, court documents showed on Friday.

Dollar eases vs. major currencies after Trump's tariff threats

07 May 2019

NEW YORK The U.S. dollar slipped to a five-week low against the yen and fell versus other currencies on Monday after U.S. President Donald Trump said he would sharply raise tariffs on Chinese goods this week, risking the derailment of trade talks between Washington and Beijing.

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