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Karen Brettell

TREASURIES-Yields fall as Trump leaves U.S., China trade deal untouched

1:25am IST

(Adds comments from Trump, Fed's Powell, updates prices) By Karen Brettell NEW YORK, May 29 U.S. Treasury yields fell on Friday after President Donald Trump appeared to keep the trade deal between the United States and China intact, but said he would begin the process of eliminating special treatment for Hong Kong. Investors are worried that escalating tensions between the United States and China will lead the countries to tear up a trade deal reached last year. Comments by Trump on Friday focused mainly on Hong Kong, saying China had broken its word over Hong Kong's autonomy. "To have come out with harsher penalties or sanctions would risk the stock market," said Lou Brien, a market strategist at DRW Trading in Chicago. "Clearly he is able to differentiate in his mind any reaction to China, and the trade deal." There have also been fears that Trump could refuse to pay back some of China's Treasury holdings, which analysts say would greatly damage demand for the bonds and send yields higher. DRW's Brien said such a move would be "a disaster." Benchmark 10-year note yields fell six basis points to 0.648%. The yield curve between two-year and 10-year notes flattened to 49 basis points, from 52 basis points on Thursday. The yield curve has steepened in recent weeks as the government increases its long-dated debt issuance at a faster pace than expected. At the same time the Federal Reserve has been reducing its bond purchases, which it ramped up to historical highs in March. Federal Reserve Chair Jerome Powell on Friday said a surge in U.S. coronavirus infections could derail the recovery from the deep downturn triggered by the pandemic, even as he reiterated the central bank's vow to keep fighting the crisis. Data on Friday showed that U.S. consumer spending dropped by a record 13.6% in April, while personal income rose 10.5% in the month. May 29 Friday 3:45PM New York / 1945 GMT Price US T BONDS JUN0 179-26/32 1-5/32 10YR TNotes JUN0 139-96/256 0-108/25 6 Price Current Net Change Yield % (bps) Three-month bills 0.1425 0.1449 -0.005 Six-month bills 0.1625 0.1649 -0.005 Two-year note 99-238/256 0.1603 -0.016 Three-year note 99-206/256 0.1913 -0.032 Five-year note 99-192/256 0.3004 -0.046 Seven-year note 100-8/256 0.4954 -0.052 10-year note 99-200/256 0.6477 -0.057 30-year bond 96-24/256 1.4103 -0.065 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.75 0.00 spread U.S. 3-year dollar swap 6.75 0.75 spread U.S. 5-year dollar swap 5.25 1.00 spread U.S. 10-year dollar swap -0.50 0.75 spread U.S. 30-year dollar swap -47.50 0.25 spread (Editing by Nick Zieminski and Alistair Bell)

TREASURIES-Yields fall as U.S., China tensions increase

29 May 2020

By Karen Brettell NEW YORK, May 29 U.S. Treasury yields dipped on Friday as concerns about escalating tensions between the United States and China weighed on risk sentiment. Hong Kong told the United States to keep out of the debate over national security legislation being imposed by China, and warned that withdrawal of the financial hub's special status under U.S. law could backfire on the U.S. economy. President Donald Trump is due to announce later on Friday his response to the Chinese parliament's advancement this week of security legislation for Hong Kong, which many lawyers, diplomats and investors fear could erode the city's freedoms. “What’s overhanging the market is Trump’s press conference,” said Tom di Galoma, a managing director at Seaport Global Holdings in New York. “I think people are a little bit concerned about what he intends for China. Tensions between the U.S. and China just continue to escalate.” Benchmark 10-year yields fell four basis points to 0.669%. The yield curve between five-year notes and 30-year bonds flattened to 112 basis points, after reaching 144 basis points on Thursday, the steepest since March. The two-year 10-year yield curve flattened to 50 basis points, from 52 basis points. The yield curve has steepened in recent weeks as the government increases its long-dated debt issuance at a faster pace than expected. At the same time the Federal Reserve has been reducing its bond purchases, after it ramped them up to historical highs in March. “The mismatch between heavy Treasury issuance and shrinking Fed purchases should intensify in the next few months,” analysts at Wells Fargo said in a report on Thursday. The analysts recommend trades that benefit from further steepening in the two-year, 10-year part of the curve as two-year yields are likely to be held down by Fed policy, while 10-year notes “probably is the most vulnerable area if the global economy does recover reasonably quickly." Data on Friday showed that U.S. consumer spending dropped by a record 13.6% in April, while personal income rose 10.5% in the month. May 29 Friday 9:16AM New York / 1316 GMT Price US T BONDS JUN0 179-14/32 0-25/32 10YR TNotes JUN0 139-60/256 0-72/256 Price Current Net Change Yield % (bps) Three-month bills 0.1425 0.1449 -0.005 Six-month bills 0.1675 0.17 0.000 Two-year note 99-235/256 0.1661 -0.010 Three-year note 99-196/256 0.2046 -0.018 Five-year note 99-172/256 0.3162 -0.030 Seven-year note 99-238/256 0.5102 -0.037 10-year note 99-148/256 0.6689 -0.036 30-year bond 95-84/256 1.4426 -0.032 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.75 0.00 spread U.S. 3-year dollar swap 6.25 0.25 spread U.S. 5-year dollar swap 5.00 0.75 spread U.S. 10-year dollar swap -0.50 0.75 spread U.S. 30-year dollar swap -47.25 0.50 spread (Editing by Nick Zieminski)

TREASURIES-Yields rise as risk sentiment improves

29 May 2020

(Adds seven-year auction results, updates prices) By Karen Brettell NEW YORK, May 28 U.S. Treasury yields rose on Thursday as stocks gained, reducing demand for safe haven bonds, and after the Treasury sold a record large amount of seven-year notes to slightly soft demand. Wall Street's major indexes rose on Thursday, boosted by gains in healthcare and technology stocks, as investors bet on a swift recovery from a coronavirus-driven economic slump. "It's an extension of some of the risk-on tone that we've seen lately," said Zach Griffiths, an interest rate strategist at Wells Fargo in Charlotte, North Carolina. Benchmark 10-year notes rose three basis points to 0.703%. The yields have traded in a range from 0.543% to 0.785% since the beginning of April. The Treasury sold a record $38 billion in seven-year notes to slightly soft demand, its final sale of intermediate-dated debt this week. A record $45 billion five-year note auction on Wednesday was also soft, while a record $44 billion in two-year notes on Tuesday saw solid interest. The Treasury has been increasing the size of its debt auctions as it finances spending meant to blunt the economic impact of business shutdowns aimed at stemming the spread of the coronavirus. Data on Thursday showed that the number of Americans seeking jobless benefits fell for an eighth straight week last week, likely as some people returned to work, but claims remained at astonishingly high levels, suggesting it could take the economy a while to rebound as businesses reopen. May 28 Thursday 2:33PM New York / 1833 GMT Price US T BONDS JUN0 178-24/32 -0-23/32 10YR TNotes JUN0 138-248/256 -0-40/25 6 Price Current Net Change Yield % (bps) Three-month bills 0.145 0.1475 0.005 Six-month bills 0.1675 0.17 -0.003 Two-year note 99-230/256 0.176 -0.006 Three-year note 99-182/256 0.223 0.003 Five-year note 99-136/256 0.3447 0.007 Seven-year note 99-192/256 0.5368 0.021 10-year note 99-64/256 0.7031 0.026 30-year bond 94-176/256 1.4698 0.037 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.00 0.75 spread U.S. 3-year dollar swap 6.00 0.25 spread U.S. 5-year dollar swap 4.50 1.00 spread U.S. 10-year dollar swap -1.25 0.00 spread U.S. 30-year dollar swap -47.75 -0.50 spread (Reporting by Karen Brettell; Editing by Bernadette Baum and Will Dunham)

TREASURIES-Yields rise as risk sentiment improves

28 May 2020

By Karen Brettell NEW YORK, May 28 U.S. Treasury yields rose on Thursday as stocks gained, reducing demand for safe haven bonds, and before the Treasury will sell a record large amount of seven-year notes. Stocks opened higher as risk sentiment improved. “It’s an extension of some of the risk-on tone that we’ve seen lately,” said Zach Griffiths, an interest rate strategist at Wells Fargo in Charlotte, North Carolina. Benchmark 10-year notes rose two basis points to 0.698%. The yields have traded in a range from 0.543% to 0.785% since the beginning of April. The Treasury will sell $38 billion in seven-year notes on Thursday, the largest sale of those notes on record. The Treasury sold a record $45 billion in five-year notes on Wednesday to slightly soft demand, and after a solid sale of a record $44 billion in two-year notes on Tuesday. Data on Thursday showed that jobless claims fell in the latest week but remained at historically high levels, while gross domestic product fell 5% in the first quarter. New orders for key U.S.-made capital goods tumbled in April and shipments declined, bolstering expectations that the novel coronavirus crisis will lead to the deepest economic contraction in the second quarter since the Great Depression. May 28 Thursday 9:48AM New York / 1348 GMT Price US T BONDS JUN0 178-25/32 -0-22/32 10YR TNotes JUN0 139-4/256 -0-28/25 6 Price Current Net Change Yield % (bps) Three-month bills 0.1425 0.1449 0.003 Six-month bills 0.1675 0.17 -0.003 Two-year note 99-229/256 0.1779 -0.004 Three-year note 99-184/256 0.2203 0.000 Five-year note 99-142/256 0.3399 0.002 Seven-year note 99-204/256 0.5299 0.014 10-year note 99-76/256 0.6982 0.021 30-year bond 94-172/256 1.4705 0.038 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 6.25 0.50 spread U.S. 5-year dollar swap 4.50 1.00 spread U.S. 10-year dollar swap -1.25 0.00 spread U.S. 30-year dollar swap -48.00 -0.75 spread (Editing by Bernadette Baum)

TREASURIES-Yields fall, slightly soft demand for record five-year note sale

28 May 2020

(Adds auction results, comments from Fed's Williams, updates prices) By Karen Brettell NEW YORK, May 27 U.S. Treasury yields fell on Wednesday but held in their recent tight range, while the Treasury sold a record amount of five-year notes to relatively light demand. Yields rose earlier in the day after the European Commission unveiled a plan to borrow on the market and then disburse to European Union countries 750 billion euros ($823 billion) in grants and loans to help them recover from their coronavirus-related economic slumps. But that reversed after U.S. stocks tumbled from the open. They clawed back most losses during the day. "There was a bit of a retracement in some of the risk appetite and sentiment," said Jon Hill, an interest rate strategist at BMO Capital Markets. Benchmark 10-year note yields fell two basis points to 0.680%. The yields have traded in a range from 0.543% to 0.785% since the beginning of April. That range reflects investor uncertainty over whether there will be a new uptick in the spread of the novel coronavirus and how soon the U.S. economy will be able to recover. "That's the uncertainty that's keeping everything in a tight range," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. New York Federal Reserve Bank President John Williams said Wednesday that officials are evaluating which steps to take to support the economy, with options including yield curve control. The Treasury sold a record $45 billion in five-year notes on Wednesday to slightly soft demand. It comes after a solid sale of a record $44 billion in two-year notes on Tuesday. The Treasury will also sell $38 billion in seven-year notes on Thursday. The U.S. government has been increasing the size of its debt auctions as it finances spending meant to blunt the economic impact of business shutdowns aimed at stemming the spread of the coronavirus. May 27 Wednesday 3:01PM New York / 1901 GMT Price US T BONDS JUN0 179-14/32 0-15/32 10YR TNotes JUN0 139-28/256 0-40/256 Price Current Net Change Yield % (bps) Three-month bills 0.14 0.1424 0.000 Six-month bills 0.17 0.1725 0.007 Two-year note 99-226/256 0.1838 0.004 Three-year note 99-184/256 0.2202 -0.003 Five-year note 100-40/256 0.343 -0.008 Seven-year note 99-224/256 0.5184 -0.017 10-year note 99-120/256 0.6802 -0.018 30-year bond 95-140/256 1.4333 -0.006 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.25 -0.50 spread U.S. 3-year dollar swap 5.75 0.25 spread U.S. 5-year dollar swap 3.50 0.50 spread U.S. 10-year dollar swap -1.50 -0.50 spread U.S. 30-year dollar swap -47.25 -1.50 spread (Reporting by Karen Brettell; editing by Jonathan Oatis and Cynthia Osterman)

TREASURIES-Yields fall as risk appetite worsens

27 May 2020

(Recasts with yield fall, adds quote, updates prices) By Karen Brettell NEW YORK, May 27 U.S. Treasury yields fell on Wednesday as U.S. stock markets dropped, reversing an earlier increase in risk appetite. Sentiment was boosted earlier on Wednesday after the European Commission unveiled a plan to borrow on the market and then disburse to European Union countries 750 billion euros ($823 billion) in grants and loans to help them recover from their coronavirus-related economic slumps. But that reversed after U.S. stock markets opened. "There was a bit of a retracement in some of the risk appetite and sentiment," said Jon Hill, an interest rate strategist at BMO Capital Markets. Benchmark 10-year note yields fell three basis points to 0.672%. The yields have traded in a range from 0.543% to 0.785% since the beginning of April. That range reflects investor uncertainty over whether there will be a new uptick in the spread of the novel coronavirus and how soon the U.S. economy will be able to recover. "That's the uncertainty that's keeping everything in a tight range," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. The Treasury will sell $45 billion in five-year notes on Wednesday, the largest sale of five-year notes on record. It sold a record $44 billion in two-year notes on Tuesday to solid demand. The Treasury will also sell $38 billion in seven-year notes on Thursday. The U.S. government has been increasing the size of its debt auctions as it finances spending meant to blunt the economic impact of business shutdowns aimed at stemming the spread of the virus. May 27 Wednesday 11:26AM New York / 1526 GMT Price US T BONDS JUN0 179-16/32 0-17/32 10YR TNotes JUN0 139-40/256 0-52/256 Price Current Net Change Yield % (bps) Three-month bills 0.145 0.1475 0.005 Six-month bills 0.17 0.1725 0.007 Two-year note 99-234/256 0.1681 -0.012 Three-year note 99-194/256 0.207 -0.016 Five-year note 100-56/256 0.3302 -0.021 Seven-year note 99-240/256 0.5092 -0.026 10-year note 99-140/256 0.6721 -0.026 30-year bond 95-176/256 1.4274 -0.012 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.25 0.50 spread U.S. 3-year dollar swap 6.50 1.00 spread U.S. 5-year dollar swap 3.75 0.75 spread U.S. 10-year dollar swap -0.75 0.25 spread U.S. 30-year dollar swap -46.25 -0.50 spread (Reporting by Karen Brettell; editing by Jonathan Oatis)

TREASURIES-Yields rise as European stimulus plan boosts risk appetite

27 May 2020

By Karen Brettell NEW YORK, May 27 U.S. Treasury yields edged higher on Wednesday as a European stimulus plan boosted risk appetite and reduced demand for safe-haven bonds, and before the Treasury is due to sell a record amount of five-year notes. The European Commission unveiled on Wednesday a plan to borrow on the market and then disburse to European Union countries 750 billion euros in grants and loans to help them recover from their coronavirus-related economic slump. "Rates are being driven by the talk of the European plan to stimulate the economy,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. Benchmark 10-year note yields rose one basis point to 0.706%. The yields have traded in a range from 0.543% to 0.785% since the beginning of April. That range reflects investor uncertainty over whether there will be a new uptick in the spread of the virus, and a subsequent drop in risk appetite, or whether the economy is on the road to recovery. "That's the uncertainty that‘s keeping everything in a tight range," Goldberg said. The Treasury will sell $45 billion in five-year notes on Wednesday, the largest sale of five-year notes on record. It sold a record $44 billion in two-year notes on Tuesday to solid demand. Treasury will also sell $38 billion in seven-year notes on Thursday. The U.S. government has been increasing the size of its debt auctions as it finances spending meant to blunt the economic impact of business shutdowns designed to stem the spread of the coronavirus. May 27 Wednesday 9:13AM New York / 1313 GMT Price US T BONDS JUN0 178-23/32 -0-8/32 10YR TNotes JUN0 138-228/256 -0-16/25 6 Price Current Net Change Yield % (bps) Three-month bills 0.14 0.1424 0.000 Six-month bills 0.165 0.1674 0.002 Two-year note 99-228/256 0.1799 0.000 Three-year note 99-180/256 0.2255 0.002 Five-year note 100-24/256 0.3558 0.005 Seven-year note 99-186/256 0.5403 0.005 10-year note 99-56/256 0.7063 0.008 30-year bond 94-240/256 1.4592 0.020 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.00 0.25 spread U.S. 3-year dollar swap 5.75 0.25 spread U.S. 5-year dollar swap 3.00 0.00 spread U.S. 10-year dollar swap -1.25 -0.25 spread U.S. 30-year dollar swap -46.75 -1.00 spread (Editing by Paul Simao)

TREASURIES-Yields rise on improving risk appetite

27 May 2020

(Adds two-year auction results, updates prices) By Karen Brettell NEW YORK, May 26 U.S. Treasury yields rose on Tuesday as improving risk appetite boosted stocks and reduced demand for safe-haven U.S. bonds, and after Treasury sold a record amount of two-year notes to solid demand. U.S. stocks jumped and the S&P 500 crossed 3,000 points as optimism about a potential coronavirus vaccine and a revival in business activity helped investors overlook simmering Sino-U.S. tensions. The Treasury saw good demand for $44 billion in two-year notes, the largest two-year sale on record. The auction had a bid to cover ratio of 2.68 times. Two-year Treasury yields were last 0.178%. They have risen from a record low of 0.105% on May 8 but have held below 0.20% since that date. The Treasury will also auction $45 billion in five-year notes on Wednesday and $38 billion in seven-year notes on Thursday. “The market right now remains range bound, even with all the supply and the Fed tapering their purchases,” said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. “I think supply at some point will be a factor, but it’s not yet.” The United States government has been increasing the size of its debt auctions as it finances spending meant to blunt the economic impact of business shutdowns designed to stem the spread of the novel coronavirus. The Federal Reserve has been reducing its daily bond purchases, after ramping them up to record levels in March to help stabilize the market as investors struggled to make trades due to worsening liquidity. Benchmark 10-year note yields rose four basis points to 0.697%. The yields have traded in a range from 0.543% to 0.785% since the beginning of April. May 26 Tuesday 3:00PM New York / 1900 GMT Price US T BONDS JUN0 178-31/32 -1-9/32 10YR TNotes JUN0 138-244/256 -0-52/25 6 Price Current Net Change Yield % (bps) Three-month bills 0.1275 0.1297 0.008 Six-month bills 0.15 0.1522 0.000 Two-year note 99-230/256 0.1778 0.010 Three-year note 99-182/256 0.2228 0.016 Five-year note 100-32/256 0.3494 0.016 Seven-year note 99-200/256 0.5322 0.025 10-year note 99-80/256 0.6965 0.038 30-year bond 95-108/256 1.4386 0.067 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.75 0.00 spread U.S. 3-year dollar swap 5.50 -0.75 spread U.S. 5-year dollar swap 3.00 -0.50 spread U.S. 10-year dollar swap -1.25 -1.00 spread U.S. 30-year dollar swap -45.75 -1.00 spread (Editing by Nick Zieminski)

TREASURIES-Yields rise on improving risk appetite, before new supply

26 May 2020

By Karen Brettell NEW YORK, May 26 U.S. Treasury yields rose on Tuesday as improving risk appetite boosted stocks and reduced demand for safe haven U.S. bonds, and before the Treasury will sell new intermediate-dated notes. Stocks jumped as business restarts and optimism about a potential coronavirus vaccine helped investors overlook Sino-U.S. tensions. The Treasury will sell $44 billion in two-year notes on Tuesday, the largest two-year sale on record. It will also auction $45 billion in five-year notes on Wednesday and $38 billion in seven-year notes on Thursday. Benchmark 10-year note yields rose four basis points to 0.695%. Despite the increase they remained in a range from 0.543% to 0.785%, where they have traded since the beginning of April. Two-year Treasury yields also held at historic lows. The yields were at 0.182% on Tuesday, not far from their record low of 0.105% reached on May 8. “The market right now remains range bound, even with all the supply and the Fed tapering their purchases,” said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. “I think supply at some point will be a factor, but it’s not yet.” The United States government has been increasing the size of its debt auctions across the board as it finances spending meant to blunt the economic impact of business shutdowns designed to stem the spread of the novel coronavirus. The Federal Reserve has been reducing its daily bond purchases, after ramping them up to record levels in March to help stabilize the market as investors struggled to make trades due to worsening liqudiity. May 26 Tuesday 9:34AM New York / 1334 GMT Price US T BONDS JUN0 179-5/32 -1-3/32 10YR TNotes JUN0 138-232/256 -0-64/25 6 Price Current Net Change Yield % (bps) Three-month bills 0.1275 0.1297 0.008 Six-month bills 0.155 0.1573 0.005 Two-year note 99-228/256 0.1819 0.014 Three-year note 99-180/256 0.2254 0.018 Five-year note 100-26/256 0.3542 0.021 Seven-year note 99-192/256 0.5368 0.030 10-year note 99-84/256 0.6949 0.036 30-year bond 95-208/256 1.4221 0.050 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.75 0.00 spread U.S. 3-year dollar swap 5.50 -0.75 spread U.S. 5-year dollar swap 2.75 -0.75 spread U.S. 10-year dollar swap -1.00 -0.75 spread U.S. 30-year dollar swap -45.75 -1.00 spread

Two-year yields hit record lows, fed fund futures imply negative rates

12 May 2020

NEW YORK Two-year Treasury yields hit record lows on Friday and fed fund futures implied the Federal Reserve could cut rates into negative territory, though analysts said the move was likely technical as investors betting on higher rates were squeezed out of their positions.

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