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Karen Brettell

TREASURIES-Yields hit four-month highs on fiscal stimulus hopes

12:44am IST

(Adds details on stimulus talks, updates yields) By Karen Brettell NEW YORK, Oct 22 Benchmark U.S. Treasury yields rose to four-month highs on Thursday and the yield curve steepened on hopes that U.S. lawmakers are close to striking a deal on new fiscal stimulus. U.S. House Speaker Nancy Pelosi said on Thursday negotiators were making progress in talks with the Trump administration for another round of financial aid amid the COVID-19 pandemic and that legislation could be hammered out "pretty soon." Hopes of new fiscal spending has dominated trading this week, and sent yields higher as it appears that a near-term deal is more likely. "It's headline driven at this point," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. Many investors are betting that new stimulus is likely after the Nov. 3 presidential election if lawmakers do not agree to it now, with Democrats likely to offer a larger package if they win a majority in the Senate. Benchmark 10-year Treasury yields rose as high as 0.853%, the highest since June 9. The yield curve between two-year and 10-year notes steepened to 70 basis points, the widest spread since June 8. New fiscal spending should improve the U.S. economic outlook and raises the prospect of higher inflation, which would send yields higher. A glut of Treasury supply to finance the spending could also weigh on the U.S. bond market. Analysts caution that ongoing economic weakness and global demand for yield could limit any large increase in bond yields. The Federal Reserve is also expected to shift more of its bond purchases to longer-dated debt if it sees yields rising faster than economic growth warrants. Yields rose slightly on Thursday after U.S. data showed new claims for jobless benefits declined more than expected last week, though they remained extremely high. The Treasury Department saw strong demand for a $17 billion in five-year Treasury Inflation-Protected Securities (TIPS) on Thursday. It came after a solid auction of $22 billion in 20-year bonds on Wednesday. October 22 Thursday 3:00PM New York / 1900 GMT Price US T BONDS DEC0 172-12/32 -0-23/32 10YR TNotes DEC0 138-88/256 -0-60/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.09 0.0913 -0.005 Six-month bills 0.11 0.1116 -0.005 Two-year note 99-242/256 0.1533 0.004 Three-year note 99-196/256 0.204 0.008 Five-year note 99-102/256 0.3731 0.022 Seven-year note 98-112/256 0.6053 0.025 10-year note 97-236/256 0.8461 0.030 20-year bond 94-240/256 1.419 0.032 30-year bond 93-100/256 1.6568 0.028 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.25 0.00 spread U.S. 3-year dollar swap 7.50 0.00 spread U.S. 5-year dollar swap 6.75 -0.75 spread U.S. 10-year dollar swap 2.50 -0.25 spread U.S. 30-year dollar swap -35.25 -0.25 spread (Editing by Bernadette Baum and Richard Chang)

Investors pile into options to bet on rate rise, Treasury weakness

22 Oct 2020

Investors have been buying options on eurodollar futures and interest rate swaps to bet on higher rates and falling U.S. Treasury debt prices if lawmakers pass more fiscal stimulus after next month’s presidential election, if not before.

Investors pile into options to bet on rate rise, Treasury weakness

22 Oct 2020

Oct 22 Investors have been buying options on eurodollar futures and interest rate swaps to bet on higher rates and falling U.S. Treasury debt prices if lawmakers pass more fiscal stimulus after next month’s presidential election, if not before.

TREASURIES-Yields hold below four-month highs, stimulus in focus

22 Oct 2020

By Karen Brettell NEW YORK, Oct 22 Benchmark U.S. Treasury yields rose on Thursday, but held just below four-month highs as investors waited on whether lawmakers will agree to pass new stimulus before the Nov. 3 presidential election. High-level negotiations on a new coronavirus aid bill faced a setback on Wednesday when President Donald Trump accused Democrats of being unwilling to craft an acceptable compromise, despite reports of some progress earlier in the day. U.S. House Speaker Nancy Pelosi on Thursday said negotiators were making progress in ongoing talks and that legislation could be hammered out "pretty soon." “It feels like we’re just consolidating, it's headline driven at this point,” said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. Benchmark 10-year note yields rose one basis point on the day to 0.824% after reaching a high of 0.836% on Wednesday, the highest since June 9. The yield curve between two-year and 10-year notes was little changed on the day at 67 basis points, after reaching 68 basis points on Wednesday, the steepest since June 8. Some investors are betting that long-dated yields will rise after the Nov. 3 vote if Democrats win a majority in the Senate and pass more stimulus than is expected from Republicans. But a global demand for yield is likely to lead buyers to step in if yields rise too far. The Federal Reserve is also expected to shift its bond purchases to include more longer-dated debt if any yield increases are not backed by significant economic improvement. Yields rose slightly on Thursday after data showed the number of Americans filing new claims for jobless benefits declined more than expected last week, though they remain extremely high. The Treasury Department will sell $17 billion in five-year Treasury Inflation-Protected Securities (TIPS) on Thursday. It saw solid demand for a $22 billion sale of 20-year bonds on Wednesday. October 22 Thursday 9:24AM New York / 1324 GMT Price US T BONDS DEC0 172-28/32 -0-7/32 10YR TNotes DEC0 138-124/256 -0-24/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.09 0.0913 -0.005 Six-month bills 0.1125 0.1141 -0.003 Two-year note 99-244/256 0.1493 0.000 Three-year note 99-200/256 0.1987 0.003 Five-year note 99-122/256 0.357 0.006 Seven-year note 98-140/256 0.5891 0.009 10-year note 98-32/256 0.8243 0.008 20-year bond 95-96/256 1.3929 0.006 30-year bond 93-240/256 1.6326 0.004 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.50 0.25 spread U.S. 3-year dollar swap 7.50 0.00 spread U.S. 5-year dollar swap 7.25 -0.25 spread U.S. 10-year dollar swap 2.50 -0.25 spread U.S. 30-year dollar swap -34.75 0.25 spread (Editing by Bernadette Baum)

TREASURIES-Yields hit four-month highs on hopes for bigger stimulus package

22 Oct 2020

(Adds details on stimulus talks, Fed's beige book, 20-year auction results, updates yields) By Karen Brettell NEW YORK, Oct 21 Benchmark U.S. Treasury yields rose to four-month highs on Wednesday on hopes that U.S. lawmakers will reach a deal to pass new fiscal stimulus in the near term. U.S. House Speaker Nancy Pelosi said there was still a chance for a deal on fresh COVID-19 relief despite resistance from Senate Republicans, though she acknowledged it might not pass until after the election. “Broadly speaking the rise in yields this week can be attributed to optimism on the stimulus package,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York. “As time goes by it feels more and more likely it’s going to be a bigger package given that the Dems seem to be driving the discussion.” Some investors are betting long-dated yields will rise after the Nov. 3 presidential if Democrats win a majority in the Senate and pass more stimulus than expected from Republicans. But other Democrat policies are also viewed as potentially weighing on the economy. “The market is at an interesting juncture where not only are there differing views about what the most likely outcome is into and through the election, but also differing views on what the market reaction should be for the same outcome,” said Michael de Pass, global head of U.S. Treasury trading at Citadel Securities. “The broadly accepted narrative is that a Democratic sweep is going to be bearish for Treasuries, but now there are people interested in taking the other side of the argument, saying that the likely increase in regulation and taxation could be quite negative for economic growth, particularly if the fiscal stimulus is not as targeted,” de Pass said. Benchmark 10-year note yields rose two basis points on the day at 0.813% after earlier reaching 0.836%, the highest since June 9. The yield curve between two-year and 10-year notes steepened as far as 68 basis points, the widest spread since June 8. The Treasury Department saw solid demand for a $22 billion sale of 20-year bonds on Wednesday. It will also sell $17 billion in five-year Treasury Inflation-Protected Securities (TIPS) on Thursday. The U.S. economy continued to recover at a slight to modest pace through early October as consumers bought homes and increased spending, but the picture varied greatly from sector to sector, the Federal Reserve said on Wednesday. October 21 Wednesday 3:00PM New York / 1900 GMT Price US T BONDS DEC0 173-5/32 -0-11/32 10YR TNotes DEC0 138-148/256 -0-32/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.095 0.0963 -0.005 Six-month bills 0.115 0.1167 0.000 Two-year note 99-244/256 0.1492 0.002 Three-year note 99-202/256 0.196 0.003 Five-year note 99-132/256 0.349 0.006 Seven-year note 98-160/256 0.5774 0.011 10-year note 98-60/256 0.8125 0.016 20-year bond 95-136/256 1.3836 0.020 30-year bond 94-36/256 1.6237 0.021 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.00 -0.50 spread U.S. 3-year dollar swap 7.50 -0.50 spread U.S. 5-year dollar swap 7.50 -0.25 spread U.S. 10-year dollar swap 2.50 -0.25 spread U.S. 30-year dollar swap -35.00 0.50 spread (Reporting by Karen Brettell; Editing by Tom Brown)

TREASURIES-Yields hit four-month highs on hopes for bigger stimulus package

21 Oct 2020

(Adds quotes, updates prices) By Karen Brettell NEW YORK, Oct 21 Benchmark U.S. Treasury yields rose to four-month highs on Wednesday on hopes that U.S. lawmakers will reach a deal to pass new fiscal stimulus in the near term, and before the Treasury Department will sell new 20-year debt. The White House and Democrats in the U.S. Congress moved closer to agreement on a new coronavirus relief package on Tuesday as President Donald Trump said he was willing to accept a large aid bill despite opposition from his own Republican Party. “Broadly speaking the rise in yields this week can be attributed to optimism on the stimulus package,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York. “As time goes by it feels more and more likely it’s going to be a bigger package given that the Dems seem to be driving the discussion.” Some investors are betting that long-dated yields will rise after the Nov. 3 presidential if Democrats win a majority in the Senate and pass more stimulus than is expected from Republicans. But other Democrat policies are also viewed as potentially weighing on the economy. “The market is at an interesting juncture where not only are there differing views about what the most likely outcome is into and through the election, but also differing views on what the market reaction should be for the same outcome,” said Michael de Pass, global head of U.S. Treasury trading at Citadel Securities. “The broadly accepted narrative is that a Democratic sweep is going to be bearish for Treasuries, but now there are people interested in taking the other side of the argument, saying that the likely increase in regulation and taxation could be quite negative for economic growth, particularly if the fiscal stimulus is not as targeted,” de Pass said. Benchmark 10-year note yields were last up two basis points on the day at 0.814% after earlier reaching 0.836%, the highest since June 9. The yield curve between two-year and 10-year notes steepened as far as 68 basis points, the most since June 8. Yields on 20-year bonds rose two basis points to 1.380% before the Treasury Department will auction $22 billion of the debt later on Wednesday. The Treasury will also sell $17 billion in five-year Treasury Inflation-Protected Securities (TIPS) on Thursday. October 21 Wednesday 9:22 AM New York / 1322 GMT Price US T BONDS DEC0 173-4/32 -0-12/32 10YR TNotes DEC0 138-144/256 -0-36/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.1 0.1014 0.000 Six-month bills 0.115 0.1167 0.000 Two-year note 99-243/256 0.1512 0.004 Three-year note 99-200/256 0.1986 0.006 Five-year note 99-124/256 0.3554 0.012 Seven-year note 98-152/256 0.582 0.016 10-year note 98-56/256 0.8142 0.017 20-year bond 95-152/256 1.3799 0.016 30-year bond 94-76/256 1.6168 0.014 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.25 -0.25 spread U.S. 3-year dollar swap 7.75 -0.25 spread U.S. 5-year dollar swap 7.25 -0.50 spread U.S. 10-year dollar swap 2.50 -0.25 spread U.S. 30-year dollar swap -35.50 0.00 spread

TREASURIES-Yields reach four-month highs on stimulus hopes

21 Oct 2020

(Adds quote, details on stimulus talks, updates yields) By Karen Brettell NEW YORK, Oct 20 Benchmark U.S. Treasury yields hit four-month highs on Tuesday and the yield curve steepened as hopes grew that U.S. lawmakers will agree on a deal for new stimulus. President Donald Trump on Tuesday pushed for a comprehensive COVID-19 relief package, and said he would accept a deal worth more than $2.2 trillion despite opposition to large spending measures among his fellow Republicans in the U.S. Senate. House of Representatives Speaker Nancy Pelosi said she was optimistic Democrats could reach a bipartisan deal as talks with Treasury Secretary Steven Mnuchin approached a Tuesday deadline for reaching a deal that could pass Congress before Election Day on Nov. 3. "Once again the market (is) pricing in some hope of a last minute fiscal package, and it seems like what we’ve heard from the speaker of the house has been encouraging enough to help risk assets and cause a little bit of a steepening of the U.S. yield curve," said Michael Lorizio, senior fixed income trader at Manulife Asset Management in Boston. Benchmark 10-year note yields rose four basis points on the day to a high of 0.801%, the highest since June 10. The yields have traded in a tight range from 0.50% to 0.80% since April, with the exception of a brief spike to 0.96% in early June. The yield curve between two-year and 10-year notes steepened to 65 basis points, the steepest since June 8. Some investors are betting long-dated yields will rise after the Nov. 3 presidential election on the likelihood of greater fiscal spending to boost the economy, with Democrats expected to support a larger package if they win a majority in the Senate. New government spending should improve the economic outlook but would also increase Treasury supply. Ongoing weakness from Covid-related business disruptions, however, is likely to keep downward pressure on yields with the Federal Reserve also likely to act to keep rates near historical lows unless the economy shows improvement. The Treasury Department will sell $22 billion in 20-year bonds on Wednesday and $17 billion in five-year Treasury Inflation-Protected Securities (TIPS) on Thursday. October 20 Tuesday 3:06PM New York / 1906 GMT Price US T BONDS DEC0 173-15/32 -1-1/32 10YR TNotes DEC0 138-176/256 -0-60/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.1 0.1014 0.000 Six-month bills 0.115 0.1167 0.000 Two-year note 99-245/256 0.1472 0.000 Three-year note 99-204/256 0.1933 0.005 Five-year note 99-140/256 0.3425 0.012 Seven-year note 98-180/256 0.5658 0.026 10-year note 98-96/256 0.7974 0.035 20-year bond 95-220/256 1.3641 0.050 30-year bond 94-156/256 1.6031 0.055 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.50 0.00 spread U.S. 3-year dollar swap 8.00 -0.25 spread U.S. 5-year dollar swap 7.75 0.00 spread U.S. 10-year dollar swap 2.75 -0.25 spread U.S. 30-year dollar swap -35.25 -0.25 spread (Editing by Nick Zieminski and Tom Brown)

TREASURIES-Yields rise as Trump boosts stimulus hopes

20 Oct 2020

By Karen Brettell NEW YORK, Oct 20 U.S. Treasury yields rose to the top end of their months-long range on Tuesday on hopes that U.S. lawmakers will pass new stimulus, as U.S. President Donald Trump said he supports a “bigger” deal. Trump predicted on Tuesday that his fellow Republicans in the U.S. Senate would go along if the White House reaches a coronavirus relief deal with Democratic House Speaker Nancy Pelosi, despite many senators' stated opposition to any large stimulus package. "I want to do it even bigger than the Democrats," Trump said in an interview with Fox News. "Not every Republican agrees with me, but they will." U.S. Senate Republicans are preparing to bring up legislation on Tuesday to replenish a program that helps small businesses slammed by the coronavirus, as Pelosi and Treasury Secretary Steve Mnuchin discuss a larger stimulus package. “It seems like the most recent move higher in yields came as we got these headlines from Trump saying that he wants to go bigger than the Democrats, and that he could get (U.S. Senate Majority Leader Mitch) McConnell on board if there is a deal,” said Tom Simons, a money market economist at Jefferies in New York. “The market has really been beholden to these on and off again headlines about a Phase 4 deal for weeks now,” Simons said. Benchmark 10-year note yields were last up three basis points higher on the day at 0.791%. The yields have traded in a tight range from 0.50% to 0.80% since April, with the exception of a brief spike to 0.96% in early June. Some investors are betting long-dated yields will rise after the Nov. 3 presidential election on the likelihood of greater fiscal spending to boost the economy, with Democrats expected to support a larger package if they win a majority in the Senate. New government spending should improve the economic outlook but also increase Treasury supply. Ongoing weakness from Covid-related business disruptions, however, is likely to keep downward pressure on yields with the Federal Reserve also likely to act to keep rates near historical lows unless the economy shows improvement. The Treasury Department will sell $22 billion in 20-year bonds on Wednesday and $17 billion in five-year Treasury Inflation-Protected Securities (TIPS) on Thursday. Data on Tuesday showed that U.S. homebuilding rebounded in September and that the Philadelphia Federal Reserve’s non-manufacturing business conditions index rose in October. October 20 Tuesday 9:16AM New York / 1316 GMT Price US T BONDS DEC0 173-24/32 -0-24/32 10YR TNotes DEC0 138-188/256 -0-48/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.1 0.1014 0.000 Six-month bills 0.115 0.1167 0.000 Two-year note 99-244/256 0.1492 0.002 Three-year note 99-204/256 0.1933 0.005 Five-year note 99-140/256 0.3425 0.012 Seven-year note 98-188/256 0.5611 0.021 10-year note 98-112/256 0.7907 0.029 20-year bond 96-24/256 1.3503 0.036 30-year bond 95-8/256 1.5847 0.037 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.50 0.00 spread U.S. 3-year dollar swap 8.25 0.00 spread U.S. 5-year dollar swap 7.75 0.00 spread U.S. 10-year dollar swap 2.50 -0.50 spread U.S. 30-year dollar swap -35.75 -0.75 spread (Editing by Nick Zieminski)

TREASURIES-Yields pare rise as stimulus optimism fades

20 Oct 2020

(Adds quote, updates prices) By Karen Brettell NEW YORK, Oct 19 U.S. Treasury yields came off their highs on Monday as optimism ebbed that U.S. lawmakers will reach a deal to launch new stimulus in the near term, though the yields held higher on the day. House Speaker Nancy Pelosi said on Sunday that differences remained with President Donald Trump's administration on a wide-ranging coronavirus relief package but that she was optimistic legislation could be pushed through before Election Day. “There was some optimism about a deal potentially being reached … it seems like some of that optimism has started to fade a little bit," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. “People realize that the real stimulus is very likely to come after the election, and most likely in early 2021.” Benchmark 10-year note yields rose two basis points on the day to 0.762%, after earlier getting as high as 0.781%. The yields have traded in a tight range from 0.50% to 0.80% since April, with the exception of a brief spike to 0.96% in early June. Some investors are betting long-dated yields will rise after the Nov. 3 presidential election on the likelihood of greater fiscal spending to boost the economy, with Democrats expected to support a larger package if they win a majority in the Senate. Ongoing weakness from Covid-related business disruptions, however, is likely to keep downward pressure on yields with the Federal Reserve also likely to act to keep rates near historical lows unless the economy shows improvement. "The economic destruction from Covid, in my view, will keep rates pretty low,” said Tom di Galoma, a managing director at Seaport Global Holdings in New York. The Treasury Department will sell $22 billion in 20-year bonds on Wednesday and $17 billion in five-year Treasury Inflation-Protected Securities (TIPS) on Thursday. October 19 Monday 3:00PM New York / 1900 GMT Price US T BONDS DEC0 174-16/32 -0-13/32 10YR TNotes DEC0 138-236/256 -0-36/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.095 0.0963 0.000 Six-month bills 0.1125 0.1141 -0.003 Two-year note 99-245/256 0.1471 0.002 Three-year note 99-208/256 0.188 0.005 Five-year note 99-156/256 0.3297 0.012 Seven-year note 98-224/256 0.5403 0.015 10-year note 98-180/256 0.7623 0.018 20-year bond 96-180/256 1.3145 0.018 30-year bond 95-220/256 1.5489 0.020 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.50 0.00 spread U.S. 3-year dollar swap 8.25 0.25 spread U.S. 5-year dollar swap 7.75 0.25 spread U.S. 10-year dollar swap 3.00 0.50 spread U.S. 30-year dollar swap -35.00 1.00 spread (Editing by Nick Zieminski)

TREASURIES-Yields rise as stimulus hopes boosts risk appetite

19 Oct 2020

By Karen Brettell NEW YORK, Oct 19 U.S. Treasury yields rose towards the top end of their recent range on Monday as optimism that lawmakers will reach a new stimulus deal boosted risk-taking and reduced demand for the safe-haven bonds. Stocks opened higher on hopes of a coronavirus vaccine by year-end, while investors were also encouraged by signs an agreement in Washington on a fiscal package could be reached soon. House Speaker Nancy Pelosi said on Sunday that differences remained with President Donald Trump's administration on a wide-ranging coronavirus relief package but that she was optimistic legislation could be pushed through before Election Day. “It’s just continued 'risk on' in the equity markets, and also we’re getting news that in the next 48 hours Pelosi and Treasury Secretary (Steven) Mnuchin are looking at a stimulus package, so I think that’s one of the reasons that the market is selling off to higher yields,” said Tom di Galoma, a managing director at Seaport Global Holdings in New York. Benchmark 10-year note yields were last up three basis points higher on the day at 0.771%. The yields have traded in a tight range from 0.50% to 0.80% since April, with the exception of a brief spike to 0.96% in early June. Some investors are betting long-dated yields will rise after the Nov. 3 presidential election on the likelihood of greater fiscal spending to boost the economy, with Democrats expected to support a larger package if they win a majority in the Senate. Ongoing weakness from Covid-related business disruptions, however, could also keep rates near historical lows, with the Federal Reserve also likely to act to keep rates low unless the economy shows improvement. "The economic destruction from Covid, in my view, will keep rates pretty low,” said di Galoma. The Treasury Department will sell $22 billion in 20-year bonds on Wednesday and $17 billion in five-year Treasury Inflation-Protected Securities (TIPS) on Thursday. October 19 Monday 9:32AM New York / 1332 GMT Price US T BONDS DEC0 174-8/32 -0-21/32 10YR TNotes DEC0 138-216/256 -0-56/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.0975 0.0989 0.003 Six-month bills 0.115 0.1167 0.000 Two-year note 99-243/256 0.1512 0.006 Three-year note 99-206/256 0.1906 0.008 Five-year note 99-148/256 0.3361 0.018 Seven-year note 98-210/256 0.5483 0.023 10-year note 98-160/256 0.7706 0.027 20-year bond 96-132/256 1.3255 0.030 30-year bond 95-160/256 1.559 0.030 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.00 -0.50 spread U.S. 3-year dollar swap 7.75 -0.25 spread U.S. 5-year dollar swap 7.25 -0.25 spread U.S. 10-year dollar swap 2.50 0.00 spread U.S. 30-year dollar swap -35.50 0.50 spread (Editing by Nick Zieminski)

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