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Karen Pierog

TREASURIES-Yields backpedal after rising on strong June jobs data

02 Jul 2020

(Recasts, updates yields, adds analyst comment) By Karen Pierog CHICAGO, July 2 U.S. Treasury yields, which rose on Thursday after better-than-expected June jobs data, slipped later in the session ahead of a long holiday weekend, which could bring more troubling news in the battle against the coronavirus outbreak. The benchmark 10-year yield, which had reached a session high of 0.724%, was last down 1.1 basis points at 0.6709%. "The knee-jerk move in the wake of the jobs report made sense," said Ben Jeffery, a strategist at BMO Capital Markets in New York. "But clearly people were reluctant to sort of push that sell-off just given the headline risk over the weekend and the fact that things on the virus front still seem to be worsening." U.S. markets will be closed on Friday for the Fourth of July holiday. Coronavirus cases have been rising sharply in parts of the United States. Florida reported more than 10,000 new cases on Thursday, the biggest one-day increase in the state since the pandemic started, according to a Reuters tally. The U.S. Labor Department reported on Thursday that nonfarm payrolls increased by 4.8 million jobs in June, surpassing a forecast of 3 million by economists in a Reuters poll. That was the most since the government started keeping records in 1939, and it followed the addition of nearly 2.7 million jobs in May. Even as the economy perks up, the Federal Reserve will still be keeping a watchful eye on interest rates, according to Justin Hoogendoorn, head of fixed income strategic analytics at Piper Sandler in Chicago. "I think the Fed will continue to kind of keep rates low. But the key is not the level of rates. In my mind, the key is the slope of the curve. As long as that curve slope is positive, I think that shows really good things to come," he said. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down less than a basis point at 0.1546%. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was at 51.40 basis points, less than a basis point higher than at Wednesday's close. July 2 Thursday 12:23PM New York / 1723 GMT Price Current Net Yield % Change (bps) Three-month bills 0.1425 0.1445 0.002 Six-month bills 0.16 0.1628 0.001 Two-year note 99-241/256 0.1546 -0.009 Three-year note 100-52/256 0.1808 -0.011 Five-year note 99-198/256 0.2958 -0.017 Seven-year note 100-4/256 0.4977 -0.018 10-year note 99-144/256 0.6709 -0.011 20-year bond 98-204/256 1.1932 -0.002 30-year bond 95-148/256 1.4325 -0.002 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.00 0.50 spread U.S. 3-year dollar swap 5.00 0.00 spread U.S. 5-year dollar swap 3.25 0.25 spread U.S. 10-year dollar swap -2.50 -0.25 spread U.S. 30-year dollar swap -50.00 -0.75 spread (Reporting by Karen Pierog in Chicago; Editing by Jonathan Oatis and Paul Simao)

TREASURIES-Yields rise on strong June jobs data

02 Jul 2020

By Karen Pierog CHICAGO, July 2 U.S. Treasury yields rose on Thursday after better-than-expected June jobs data boosted hopes that the economy was bouncing back from the coronavirus outbreak, although a surge in virus cases continues to threaten the recovery. The benchmark 10-year yield was last up 1.9 basis points at 0.7006%. Justin Hoogendoorn, head of fixed income strategic analytics at Piper Sandler in Chicago, said the reaction in the 10-year note was "muted," given the positive news, and could be due to Thursday's early market close ahead of the Fourth of July holiday. The U.S. Labor Department reported that nonfarm payrolls increased by 4.8 million jobs in June, surpassing a forecast of 3 million by economists in a Reuters poll. That was the most since the government started keeping records in 1939 and it followed the addition of nearly 2.7 million jobs in May. Even as the economy perks up, Hoogendoorn said the Federal Reserve will still be keeping a watchful eye on interest rates. "I think the Fed will continue to kind of keep rates low. But the key is not the level of rates. In my mind, the key is the slope of the curve. As long as that curve slope is positive, I think that shows really good things to come," he said. Meanwhile, new cases of COVID-19, the illness caused by the coronavirus, shot up by nearly 50,000 in the United States on Wednesday, according to a Reuters tally, marking the biggest one-day spike since the start of the pandemic. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up less than a basis point at 0.1664%. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was at 53 basis points, about 2 basis points higher than at Wednesday's close. July 2 Thursday 8:35AM New York / 1335 GMT Price Current Net Yield % Change (bps) Three-month bills 0.145 0.1471 0.005 Six-month bills 0.1625 0.1653 0.003 Two-year note 99-235/256 0.1664 0.002 Three-year note 100-42/256 0.194 0.002 Five-year note 99-164/256 0.3228 0.010 Seven-year note 99-204/256 0.5297 0.014 10-year note 99-72/256 0.7006 0.019 20-year bond 98-72/256 1.2227 0.028 30-year bond 94-248/256 1.4584 0.024 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.00 0.50 spread U.S. 3-year dollar swap 5.25 0.25 spread U.S. 5-year dollar swap 3.25 0.25 spread U.S. 10-year dollar swap -2.25 0.00 spread U.S. 30-year dollar swap -49.25 0.00 spread (Reporting by Karen Pierog in Chicago; editing by Jonathan Oatis)

TREASURIES-Yields climb on strong manufacturing data, Fed minutes

02 Jul 2020

(Recasts, updates yields, adds analysts' comments, Fed minutes) By Karen Pierog CHICAGO, July 1 U.S. Treasury yields on the long end of the curve shot higher on Wednesday after data showed manufacturing activity rebounded in June and minutes from the Federal Reserve's last meeting indicated yield curve control was not coming anytime soon. The benchmark 10-year yield was last up 2.9 basis points at 0.6824%. Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia, said the Fed minutes made it clear yield curve control was not going to happen in the immediate future. "That gave the long end permission to sell off a little bit in the afternoon," he said. According to the June meeting minutes, all participants agreed to continue studying yield curve target policies. Earlier on Wednesday, the 10-year yield hit a session high of 0.702 after the Institute for Supply Management's release of its index of national factory activity, which jumped to a reading of 52.6 last month from 43.1 in May, marking the strongest level since April 2019. Brian Brennan, a fixed income portfolio manager at T. Rowe Price in Baltimore, said data continues to be "back and forth" in its depiction of the economy and that he believes Treasuries will be range bound over the summer. "Bond managers are kind of hunkered down right now and, if anything, we know rates are low for a long time," he said. Coming up on Thursday, the U.S. Labor Department will release jobs data. The report will likely show private employers hired 2.9 million workers in June, according to a Reuters survey of economists. That would lead to nonfarm payrolls increasing by 3 million on top of the 2.5 million created in May, but still nearly 17 million below their pre-coronavirus pandemic level. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was at 51.40 basis points, about 1 basis point higher than at Tuesday's close. July 1 Wednesday 2:31PM New York / 1931 GMT Price Current Net Yield % Change (bps) Three-month bills 0.14 0.142 -0.005 Six-month bills 0.16 0.1628 -0.002 Two-year note 99-235/256 0.1662 0.012 Three-year note 100-44/256 0.1916 0.016 Five-year note 99-172/256 0.3163 0.028 Seven-year note 99-224/256 0.5182 0.028 10-year note 99-116/256 0.6824 0.029 20-year bond 98-188/256 1.1967 0.021 30-year bond 95-144/256 1.4331 0.022 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 6.75 -0.25 spread U.S. 3-year dollar swap 5.00 -0.25 spread U.S. 5-year dollar swap 3.25 -0.25 spread U.S. 10-year dollar swap -2.25 -0.25 spread U.S. 30-year dollar swap -49.25 0.25 spread (Reporting by Karen Pierog in Chicago; editing by Jonathan Oatis and Lisa Shumaker)

TREASURIES-Yields climb on strong manufacturing data

01 Jul 2020

(Recasts, updates yields, adds ISM data, add fed official's comments) By Karen Pierog CHICAGO, July 1 U.S. Treasury yields on the long end of the curve shot higher on Wednesday after data showed manufacturing activity rebounded in June. The benchmark 10-year yield, which rose to a session high of 0.702% after the data, was last up 2.1 basis points at 0.6742%. The Institute for Supply Management (ISM) index of national factory activity jumped to a reading of 52.6 last month from 43.1 in May, its strongest level since April 2019, ending three-straight months of contraction. The Fed, meanwhile, will release minutes from its June meeting where the topic of yield curve control, a strategy that involves targeting interest rates for certain maturities, was discussed. On Tuesday, New York Federal Reserve Bank President John Williams said the potential costs and benefits of the move were still being analyzed. "I think there's the idea that yield curve control and just sort of other new policies from the Fed are viable but not necessarily entering general circulation anytime soon," said Jim Vogel, an interest rate strategist at FHN Financial in Memphis, Tennessee. Ahead of the release, San Francisco Federal Reserve Bank President Mary Daly on Wednesday painted a grim picture of the U.S. economic outlook, saying that even under her best-case scenario, unemployment will still top 10% at year's end and will not return to pre-crisis levels for four or five years. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was last up less than a basis point at 0.1584%. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was at 51.50 basis points, 1.1 basis points higher than at Tuesday's close. July 1 Wednesday 12:15 PM New York / 1715 GMT Price Current Net Yield % Change (bps) Three-month bills 0.14 0.142 -0.005 Six-month bills 0.16 0.1628 -0.002 Two-year note 99-239/256 0.1584 0.004 Three-year note 100-50/256 0.1837 0.008 Five-year note 99-184/256 0.3068 0.019 Seven-year note 99-244/256 0.5068 0.017 10-year note 99-136/256 0.6742 0.021 20-year bond 98-216/256 1.1905 0.015 30-year bond 95-164/256 1.4298 0.019 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.00 0.00 spread U.S. 3-year dollar swap 5.25 0.00 spread U.S. 5-year dollar swap 3.25 -0.25 spread U.S. 10-year dollar swap -2.00 0.00 spread U.S. 30-year dollar swap -48.75 0.75 spread (Reporting by Karen Pierog in Chicago; editing by Jonathan Oatis and Lisa Shumaker)

TREASURIES-Yields climb as manufacturing data, FOMC minutes loom

01 Jul 2020

By Karen Pierog CHICAGO, July 1 U.S. Treasury yields were higher on Wednesday as investors looked ahead to manufacturing data and clues from the Federal Reserve on the potential for yield curve control. The benchmark 10-year yield, which rose slightly after the release of ADP jobs data, was last up 3.1 basis points at 0.684%. Jim Vogel, an interest rate strategist at FHN Financial in Memphis, Tennessee, said the market's focus will be on the Institute for Supply Management (ISM) manufacturing index for June, particularly after data showed China's factory activity grew at its fastest clip since December. "Anything well over 50 is going to put further pressure on bond prices," he said. The Fed, meanwhile, will release minutes from its June meeting where the topic of yield curve control, a strategy that involves targeting interest rates for certain maturities, was discussed. On Tuesday, New York Federal Reserve Bank President John Williams said the potential costs and benefits of the move were still being analyzed. "I think there's the idea that yield curve control and just sort of other new policies from the Fed are viable but not necessarily entering general circulation anytime soon," Vogel said. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was unchanged at 0.1544%. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was at 53 basis points, 2.6 basis points higher than at Tuesday's close. July 1 Wednesday 8:26AM New York / 1326 GMT Price Current Net Yield % Change (bps) Three-month bills 0.145 0.1471 0.000 Six-month bills 0.1625 0.1653 0.000 Two-year note 99-241/256 0.1544 0.000 Three-year note 100-52/256 0.181 0.005 Five-year note 99-188/256 0.3036 0.016 Seven-year note 99-232/256 0.5137 0.024 10-year note 99-112/256 0.684 0.031 20-year bond 98-140/256 1.2075 0.031 30-year bond 95-76/256 1.4444 0.033 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.00 0.00 spread U.S. 3-year dollar swap 5.25 0.00 spread U.S. 5-year dollar swap 3.50 0.00 spread U.S. 10-year dollar swap -2.00 0.00 spread U.S. 30-year dollar swap -49.00 0.50 spread (Reporting by Karen Pierog in Chicago; editing by Jonathan Oatis)

TREASURIES-Longer-term yields rise amid month-end rebalancing trades

01 Jul 2020

(Recasts, updates yields, adds analyst comments) By Karen Pierog CHICAGO, June 30 U.S. Treasury yields on the longer rose on Tuesday as month-end rebalancing injected a touch of volatility into the market. The benchmark 10-year yield was last up 1.7 basis points at 0.6528%, while the yield on the five-year note, which hit a record low of 0.266% earlier in the session, was last up less than a basis point at 0.2862%. Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York, said the volatility may be due to some month-end rebalancing trades. He noted that overall trading volume was "very, very light" and added that the market seemed range bound. Meanwhile, investors were fixated on spikes in U.S. coronavirus cases and what those mean for an economic rebound. Collin Martin, fixed income strategist at Schwab Center for Financial Research in New York, said a surge in virus cases in parts of the United States was overshadowing economic data. "It's not that we're not looking at the numbers anymore. But if we're getting data from May and early June, they might not matter as much if we're seeing cases rise," he said. "That seems to be the reason why we're seeing 10-year yields drop lately. They're back to pretty much the low end of their coronavirus trading range," he added. Coronavirus cases more than doubled in at least 10 U.S. states, including Florida and Texas, this month, according to a Reuters analysis. In testimony before the U.S. House of Representatives Financial Services Committee, Federal Reserve Chair Jerome Powell said the economy's path is highly uncertain and gave updates on various programs the Fed put in place to combat the economic fallout from the virus.. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was at 49.90 basis points, 2.8 basis points higher than at Monday's close. June 30 Tuesday 2:19PM New York / 1919 GMT Price Current Net Yield % Change (bps) Three-month bills 0.145 0.1471 -0.003 Six-month bills 0.1625 0.1653 -0.005 Two-year note 99-243/256 0.1505 -0.009 Three-year note 100-58/256 0.1731 0.000 Five-year note 99-210/256 0.2862 0.005 Seven-year note 100-24/256 0.4863 0.013 10-year note 99-188/256 0.6528 0.017 20-year bond 99-24/256 1.1763 0.019 30-year bond 96-16/256 1.412 0.022 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.25 0.50 spread U.S. 3-year dollar swap 5.75 0.00 spread U.S. 5-year dollar swap 3.50 0.00 spread U.S. 10-year dollar swap -2.00 0.25 spread U.S. 30-year dollar swap -49.50 0.50 spread (Reporting by Karen Pierog; Editing by Sandra Maler and Cynthia Osterman)

TREASURIES-Yields dip as U.S. coronavirus cases surge

30 Jun 2020

By Karen Pierog CHICAGO, June 30 U.S. Treasury yields headed lower on Tuesday as investors fixated on a continued surge in the nation's coronavirus cases that could dampen hopes for an economic rebound. The benchmark 10-year yield was last down 1.4 basis points at 0.6217%, while the yield on the five-year note, which hit a record low of 0.266% earlier in the session, was last down 1.4 basis points at 0.2673%. Collin Martin, fixed income strategist at Schwab Center for Financial Research in New York, said a surge in virus cases in parts of the United States was overshadowing economic data. "It's not that we're not looking at the numbers anymore. But if we're getting data from May and early June, they might not matter as much if we're seeing cases rise," he said. "That seems to be the reason why we're seeing 10-year yields drop lately. They're back to pretty much the low end of their coronavirus trading range," he added. California and Texas reported record spikes in new COVID-19 infections on Monday, while Arizona closed bars, nightclubs, gyms, movie theaters and water parks for at least 30 days. Later on Tuesday, Federal Reserve Chair Jerome Powell will testify before the U.S. House of Representatives Financial Services Committee. In prepared remarks, Powell said the path forward depends on "policy actions taken at all levels of government" to support the economic recovery. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was at 47.70 basis points, less than a basis point higher than at Monday's close. June 30 Tuesday 8:52AM New York / 1352 GMT Price Current Net Yield % Change (bps) Three-month bills 0.145 0.1471 -0.003 Six-month bills 0.1625 0.1653 -0.005 Two-year note 99-244/256 0.1485 -0.012 Three-year note 100-66/256 0.1625 -0.010 Five-year note 99-234/256 0.2673 -0.014 Seven-year note 100-68/256 0.4614 -0.012 10-year note 100-8/256 0.6217 -0.014 20-year bond 99-196/256 1.1382 -0.019 30-year bond 96-252/256 1.3734 -0.017 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.25 0.50 spread U.S. 3-year dollar swap 5.75 0.00 spread U.S. 5-year dollar swap 3.50 0.00 spread U.S. 10-year dollar swap -2.25 0.00 spread U.S. 30-year dollar swap -49.75 0.25 spread (Reporting by Karen Pierog; Editing by Sandra Maler)

TREASURIES-Longer-term yields rise as risk appetite improves

30 Jun 2020

(Recasts, updates yields, adds analyst comments) By Karen Pierog CHICAGO, June 29 U.S. Treasury yields on the long end of curve edged higher on Monday as investors, hoping for a stimulus-backed economic rebound, piled into stocks after last week's sharp sell-off. The benchmark 10-year yield was last up less than a basis point at 0.6413%, while the 30-year yield rose 2.5 basis points to 1.397%. Kim Rupert, senior economist at Action Economics in San Francisco, said the market was in part unwinding from last week's safe-haven bid. She added that the yield curve was steepening after some flattening in the prior week. "The Treasury market is just supported near-term because of so much uncertainty over the (coronavirus) and what that's going to do to the recovery with a number of states pausing reopening policies," she said. The global death toll from COVID-19 surpassed half a million people on Sunday, according to a Reuters tally, with the United States accounting for about one-quarter of all the deaths. Bill Merz, head of fixed income research at U.S. Bank Wealth Management in Minneapolis, said he expected small changes for long-term yields in line with risk preferences, noting that Treasuries may be "one of the least interesting markets for the rest of the year" due to the Federal Reserve's influence on the short end of the curve. "There's not many places to go in terms of yields in the front end of the curve," he said. "They're going to be relatively close to where they are now until the Fed decides otherwise and that has a pretty powerful influence at the longer end of the curve as well." A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, viewed as an indicator of economic expectations, was at 47.90 basis points, less than a basis point higher than at Friday's close. June 29 Monday 1:47PM New York / 1847 GMT Price Current Net Yield % Change (bps) Three-month bills 0.135 0.1369 -0.008 Six-month bills 0.165 0.1674 -0.003 Two-year note 99-237/256 0.1622 -0.006 Three-year note 100-56/256 0.1758 -0.008 Five-year note 99-210/256 0.2862 -0.011 Seven-year note 100-38/256 0.4784 -0.006 10-year note 99-216/256 0.6413 0.003 20-year bond 99-84/256 1.1629 0.021 30-year bond 96-108/256 1.3969 0.025 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 6.50 -0.50 spread U.S. 3-year dollar swap 5.50 -0.25 spread U.S. 5-year dollar swap 3.50 -0.25 spread U.S. 10-year dollar swap -2.50 -1.00 spread U.S. 30-year dollar swap -50.00 -1.25 spread (Reporting by Karen Pierog in Chicago; Editing by Dan Grebler)

Calls to defund police on collision course with U.S. city budget gaps

25 Jun 2020

CHICAGO A movement in the United States to defund local police departments, sparked by the death of George Floyd in Minneapolis, is colliding with a grim budget reality facing cities.

Calls to defund police on collision course with U.S. city budget gaps

25 Jun 2020

CHICAGO, June 25 A movement in the United States to defund local police departments, sparked by the death of George Floyd in Minneapolis, is colliding with a grim budget reality facing cities.

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