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India

Richard Leong

U.S. Fed may tweak key 'reverse repo' rate - minutes

5:25am IST

NEW YORK The Federal Reserve may consider tweaking how much it pays mortgage agencies, money market funds and other non-banks in certain Treasury-backed transactions, the U.S. central bank's minutes released on Wednesday showed.

'Zombie' LIBOR seen besetting U.S. mortgage industry

22 May 2019

NEW YORK, May 21 The U.S. mortgage industry may have to grapple with a "zombie" version of the London interbank offered rate even after the rate benchmark is expected to be phased out after 2021, industry officials said on Tuesday.

UPDATE 2-China sells most long-dated U.S. Treasuries in nearly 2-1/2 years

16 May 2019

* Foreigners sell U.S. stocks, buy agency, corporate bonds (Updates graphic, adds quote)

REFILE-MONEY MARKETS-Disappointing data raise U.S. rate-cut expectations

15 May 2019

NEW YORK, May 15 U.S. interest rates traders on Wednesday added bets the Federal Reserve would lower borrowing costs later this year to prolong the current economic expansion in the wake of disappointing domestic data on retail sales and industrial output.

MONEY MARKETS-U.S.-China trade war lifts bets on U.S. rate cut

14 May 2019

NEW YORK, May 13 Interest rate traders increased their bets the U.S. Federal Reserve would lower interest rates by year-end to counter a domestic economic slowdown stemming from an escalation in the trade war between China and the United States.

TREASURIES OUTLOOK-U.S. bond yields fall as China plans tariff retaliation

14 May 2019

* Beijing to slap higher duties on $60 bln of U.S. goods * U.S. 3-month, 10-year part of yield curve inverts * Speculation about China dumping U.S. bonds heats up again * Futures imply traders raise bets on a year-end U.S. rate cut (Repeats to additional subscribers) By Richard Leong NEW YORK, May 13 U.S. Treasury yields fell to six-week lows on Monday as investors piled into low-risk assets after China announced plans to impose additional tariffs on U.S.-made goods in retaliation for a U.S. increase in duties on Chinese imports on Friday. China's finance ministry said early on Monday it plans to set import tariffs ranging from 5% to 25% on 5,140 U.S. products on a target list worth about $60 billion. It said the tariffs will take effect on June 1. Beijing's response rattled already jittery investors, who were caught off guard by last week's breakdown of efforts to reach a trade deal between the world's biggest economic powers. Investors and analysts are assessing the impact from this round of tariffs on global business activities. "With rising protectionist measures, the damage to economic growth is increasing," said Stephen Gallagher, U.S. chief economist at Societe Generale in New York. He estimated the latest round of U.S. and Chinese tariffs may reduce global economic growth by 0.15%. The futures market implied traders now see a 70% chance the Federal Reserve would reduce interest rates by year-end, according to CME Group's FedWatch program. At 2:52 p.m. (1852 GMT), the yield on the benchmark 10-year Treasury was 5.2 basis points lower at 2.4033% after touching 2.389%, the lowest since March 28. Ten-year yields fell below those on three-month Treasury bills. A sustained inversion of this part of the yield curve has preceded every U.S. recession in the past 50 years. Buying of longer-dated Treasuries likely stemmed from hedge funds covering short positions in the wake of renewed U.S.-China trade tension, according to data from Commodity Futures Trading Commission released late Friday. As investors shifted money into Treasuries, yen, gold and other safe-haven assets, they pulled money out of stocks and other risky investments. Wall Street's main indexes fell sharply in early trading with the S&P 500 losing 2.19%. In addition to more tariffs, traders are concerned China, the largest foreign U.S. creditor, may dump Treasuries to counter the Trump administration's hardening trade stance. Most analysts downplayed such a move, which would send U.S. borrowing costs soaring, strengthen the yuan and hurt Chinese exporters. It would also hammer the value of China's massive Treasury holdings, which totaled $1.131 trillion in February. "It may end up hurting the Chinese economy more than the U.S. economy," said Mike Lorizio, head of Treasuries trading at Manulife Asset Management in Boston. "But it shows the overall deterioration in negotiations," he said about the renewed market chatter about China selling Treasuries as a trade weapon. May 13 Monday 2:53PM New York / 1853 GMT Price US T BONDS JUN9 149-15/32 26/32 10YR TNotes JUN9 124-108/256 14/32 Price Current Net Yield % Change (bps) Three-month bills 2.36 2.4063 -0.023 Six-month bills 2.3575 2.4183 -0.025 Two-year note 100-28/256 2.1925 -0.059 Three-year note 99-236/256 2.152 -0.062 Five-year note 100-74/256 2.1881 -0.062 Seven-year note 100-142/256 2.2883 -0.058 10-year note 99-188/256 2.405 -0.050 30-year bond 100-188/256 2.8385 -0.034 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 21.00 1.25 30-year vs 5-year yield 65.00 2.70 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.25 -1.50 spread U.S. 3-year dollar swap 5.75 -1.50 spread U.S. 5-year dollar swap 2.75 -1.00 spread U.S. 10-year dollar swap -3.25 -1.25 spread U.S. 30-year dollar swap -27.75 -2.00 spread (Reporting by Richard Leong; Editing by Dan Grebler and Nick Zieminski)

TREASURIES-U.S. bond yields fall as China plans tariff retaliation

14 May 2019

* Beijing to slap higher duties on $60 bln of U.S. goods * U.S. 3-month, 10-year part of yield curve inverts * Speculation about China dumping U.S. bonds heats up again * Futures imply traders raise bets on a year-end U.S. rate cut (Updates market action, adds quote) By Richard Leong NEW YORK, May 13 U.S. Treasury yields fell to six-week lows on Monday as investors piled into low-risk assets after China announced plans to impose additional tariffs on U.S.-made goods in retaliation for a U.S. increase in duties on Chinese imports on Friday. China's finance ministry said early on Monday it plans to set import tariffs ranging from 5% to 25% on 5,140 U.S. products on a target list worth about $60 billion. It said the tariffs will take effect on June 1. Beijing's response rattled already jittery investors, who were caught off guard by last week's breakdown of efforts to reach a trade deal between the world's biggest economic powers. Investors and analysts are assessing the impact from this round of tariffs on global business activities. "With rising protectionist measures, the damage to economic growth is increasing," said Stephen Gallagher, U.S. chief economist at Societe Generale in New York. He estimated the latest round of U.S. and Chinese tariffs may reduce global economic growth by 0.15%. The futures market implied traders now see a 70% chance the Federal Reserve would reduce interest rates by year-end, according to CME Group's FedWatch program. At 2:52 p.m. (1852 GMT), the yield on the benchmark 10-year Treasury was 5.2 basis points lower at 2.4033% after touching 2.389%, the lowest since March 28. Ten-year yields fell below those on three-month Treasury bills. A sustained inversion of this part of the yield curve has preceded every U.S. recession in the past 50 years. Buying of longer-dated Treasuries likely stemmed from hedge funds covering short positions in the wake of renewed U.S.-China trade tension, according to data from Commodity Futures Trading Commission released late Friday. As investors shifted money into Treasuries, yen, gold and other safe-haven assets, they pulled money out of stocks and other risky investments. Wall Street's main indexes fell sharply in early trading with the S&P 500 losing 2.19%. In addition to more tariffs, traders are concerned China, the largest foreign U.S. creditor, may dump Treasuries to counter the Trump administration's hardening trade stance. Most analysts downplayed such a move, which would send U.S. borrowing costs soaring, strengthen the yuan and hurt Chinese exporters. It would also hammer the value of China's massive Treasury holdings, which totaled $1.131 trillion in February. "It may end up hurting the Chinese economy more than the U.S. economy," said Mike Lorizio, head of Treasuries trading at Manulife Asset Management in Boston. "But it shows the overall deterioration in negotiations," he said about the renewed market chatter about China selling Treasuries as a trade weapon. May 13 Monday 2:53PM New York / 1853 GMT Price US T BONDS JUN9 149-15/32 26/32 10YR TNotes JUN9 124-108/256 14/32 Price Current Net Yield % Change (bps) Three-month bills 2.36 2.4063 -0.023 Six-month bills 2.3575 2.4183 -0.025 Two-year note 100-28/256 2.1925 -0.059 Three-year note 99-236/256 2.152 -0.062 Five-year note 100-74/256 2.1881 -0.062 Seven-year note 100-142/256 2.2883 -0.058 10-year note 99-188/256 2.405 -0.050 30-year bond 100-188/256 2.8385 -0.034 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 21.00 1.25 30-year vs 5-year yield 65.00 2.70 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.25 -1.50 spread U.S. 3-year dollar swap 5.75 -1.50 spread U.S. 5-year dollar swap 2.75 -1.00 spread U.S. 10-year dollar swap -3.25 -1.25 spread U.S. 30-year dollar swap -27.75 -2.00 spread (Reporting by Richard Leong; Editing by Dan Grebler and Nick Zieminski)

TREASURIES-U.S. bonds market rallies as China plans tariff retaliation

13 May 2019

* Beijing to slap higher duties on $60 bln of U.S. goods * U.S. 3-month, 10-year part of yield curve inverts * Speculation about China dumping U.S. bonds heats up again (Updates market action, adds quote) By Richard Leong NEW YORK, May 13 U.S. Treasury yields fell to six-week lows on Monday as investors piled into low-risk assets after China announced plans to impose additional tariffs on U.S.-made goods in retaliation for a U.S. increase in duties on Chinese imports on Friday. China's finance ministry said early on Monday it plans to set import tariffs ranging from 5% to 25% on 5,140 U.S. products on a target list worth about $60 billion. It said the tariffs will take effect on June 1. Beijing's response rattled already jittery investors, who were caught off guard by last week's breakdown of efforts to reach a trade deal between the world's biggest economic powers. Investors and analysts are assessing the impact from this round of tariffs on global business activities. "With rising protectionist measures, the damage to economic growth is increasing," said Stephen Gallagher, U.S. chief economist at Societe Generale in New York. He estimated the latest round of U.S. and Chinese tariffs may reduce global economic growth by 0.15%. At 12:25 p.m. (1625 GMT), the yield on the benchmark 10-year Treasury was 6.4 basis points lower at 2.3909% after touching 2.389%, the lowest since March 29. Ten-year yields fell below those on three-month Treasury bills. A sustained inversion of this part of the yield curve has preceded every U.S. recession in the past 50 years. As investors shifted money into Treasuries, yen, gold and other safe-haven assets, they pulled money out of stocks and other risky investments. Wall Street's main indexes fell sharply in early trading with the S&P 500 losing 2.57%. In addition to more tariffs, traders are concerned China, which is the largest foreign U.S. creditor, may dump Treasuries as a weapon to counter the Trump administration's hardening trade stance. Most analysts downplayed such a move, which would send U.S. borrowing costs soaring, strengthen the yuan and hurt Chinese exporters. It would also hammer the value of China's massive Treasury holdings, which totaled $1.131 trillion in February. "I think the Chinese would be 'shooting themselves in the foot' should they dump Treasuries," Ellis Phifer, senior market strategist at Raymond James, wrote in a research note. "Of course, even with the massive cost, I would not put it past them to threaten such a move," he added. May 13 Monday 12:24PM New York / 1624 GMT Price US T BONDS JUN9 149-20/32 31/32 10YR TNotes JUN9 124-132/256 17/32 Price Current Net Yield % Change (bps) Three-month bills 2.365 2.4115 -0.017 Six-month bills 2.3575 2.4183 -0.025 Two-year note 100-34/256 2.1803 -0.072 Three-year note 99-244/256 2.1412 -0.073 Five-year note 100-92/256 2.1731 -0.077 Seven-year note 100-162/256 2.2761 -0.070 10-year note 99-212/256 2.3944 -0.061 30-year bond 100-216/256 2.8331 -0.040 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 21.30 1.45 30-year vs 5-year yield 65.70 3.55 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.25 -1.50 spread U.S. 3-year dollar swap 5.75 -1.50 spread U.S. 5-year dollar swap 2.75 -1.00 spread U.S. 10-year dollar swap -3.25 -1.25 spread U.S. 30-year dollar swap -27.75 -2.00 spread (Reporting by Richard Leong; Editing by Dan Grebler)

TREASURIES-U.S. yields hit six-week lows as China plans tariff retaliation

13 May 2019

(Adds quote, table) By Richard Leong NEW YORK, May 13 U.S. Treasury yields fell to six-week lows on Monday as investors piled into low-risk assets after China announced plans to impose additional tariffs on U.S.-made goods in retaliation against a U.S. increase in duties on Chinese imports on Friday. China's finance ministry said earlier Monday it plans to set import tariffs ranging from 5% to 25% on 5,140 U.S. products on a target list worth about $60 billion. It said the tariffs will take effect on June 1. Beijing's response rattled already jittery investors who were caught off guard by last week's breakdown of efforts reach a trade deal between the world's biggest economic powers. Investors and analysts are assessing the impact from this round of tariffs on global business activities. "With rising protectionist measures, the damage to economic growth is increasing," said Stephen Gallagher, U.S. chief economist at Societe Generale in New York. Gallagher estimated the latest round of U.S. and Chinese tariffs may reduce global economic growth by 0.15%. At 10:05 a.m. (1405 GMT), the yield on the benchmark 10-year Treasury was 5.3 basis points lower at 2.4015% after touching 2.398%, the lowest since March 29. Ten-year yields fell below those on three-month Treasury bills. A sustained inversion of this part of the yield curve has preceded every U.S. recession in the past 50 years. As investors shifted money into Treasuries, yen, gold and other safe-haven assets, they pulled money out of stocks and other risky investments. Wall Street's main indexes fell sharply in early trading with the S&P 500 losing 2.06%. May 13 Monday 10:07AM New York / 1407 GMT Price US T BONDS JUN9 149-14/32 25/32 10YR TNotes JUN9 124-120/256 16/32 Price Current Net Yield % Change (bps) Three-month bills 2.37 2.4166 -0.012 Six-month bills 2.36 2.4209 -0.022 Two-year note 100-34/256 2.1803 -0.072 Three-year note 99-242/256 2.1439 -0.070 Five-year note 100-86/256 2.1781 -0.072 Seven-year note 100-152/256 2.2822 -0.064 10-year note 99-200/256 2.3997 -0.055 30-year bond 100-172/256 2.8416 -0.031 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 21.80 2.00 30-year vs 5-year yield 66.30 4.05 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.25 -1.50 spread U.S. 3-year dollar swap 5.25 -2.00 spread U.S. 5-year dollar swap 2.50 -1.25 spread U.S. 10-year dollar swap -3.50 -1.50 spread U.S. 30-year dollar swap -28.00 -2.25 spread (Reporting by Richard Leong)

TREASURIES OUTLOOK-U.S. bond yields flat as trade jitters diminish

11 May 2019

* Fresh U.S. levies on Chinese goods go into effect * U.S., Chinese negotiators ink no trade deal, talks to continue * Trump suggests in tweets tariffs may or may not be removed * U.S. CPI rises in April, underlying inflation stays benign (Repeats to additional subscribers) By Richard Leong NEW YORK, May 10 U.S. Treasury yields were little changed on Friday, with longer-dated yields hovering at five-week lows, as worries about trade tension between China and the United States simmered down even in the absence of a deal following two-days of negotiations. Reduced anxiety about a trade war between the world's two biggest economies offset mildly disappointing data that showed domestic inflation rose less than market expectations. The United States escalated a tariff war with China on Friday by raising duties on $200 billion worth of Chinese goods, and China is expected to retaliate. Both sides said the latest round of talks went well enough for further discussions. President Donald Trump said on Twitter on Friday the new tariffs on Chinese goods may or may not be removed depending on future talks. Still, doubts persist over an imminent agreement to resolve the two nations' trade differences. "No progress has been made. Now negotiations are going to Beijing. This seems like they will drag on," said Subadra Rajappa, head of U.S. rates strategy at SG Corporate & Investment Banking in New York. In late U.S. trading, benchmark 10-year Treasury yields edged up 0.3 basis point to 2.4601%. They fell to a five-week low of 2.424% on Thursday. On the week, 10-year yields fell 7 basis points, the steepest drop in seven weeks. Two-year Treasury yields dipped 1 basis point to 2.2579%, bringing its weekly decline to 8 basis points. Wall Street's main index ended higher on the day with the S&P 500 gaining over 0.4%. U.S. bond yields had fallen earlier on Friday in reaction to a mildly weaker-than-forecast report on U.S. consumer prices. The government's consumer price index increased 0.3% in April, less than the 0.4% increase forecast by analysts polled by Reuters. The latest CPI reading reinforced the notion that the Federal Reserve would leave key lending rates unchanged this year, although the futures market still implied traders expect a 60% chance of a rate cut at the end of the year. "For the Fed, the disappointment in the April CPI report is not likely to materially change the clear majority view that some significant part of recent soft inflation numbers is transitory," TD Securities analysts wrote in a research note. May 10 Friday 3:50PM New York / 1950 GMT Price US T BONDS JUN9 148-20/32 -2/32 10YR TNotes JUN9 123-244/256 -1/32 Price Current Net Yield % Change (bps) Three-month bills 2.3775 2.4244 -0.010 Six-month bills 2.38 2.4418 -0.007 Two-year note 99-252/256 2.2579 -0.010 Three-year note 99-184/256 2.2224 -0.003 Five-year note 99-250/256 2.2549 0.002 Seven-year note 100-38/256 2.3517 0.004 10-year note 99-64/256 2.4601 0.003 30-year bond 99-236/256 2.8789 -0.002 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 19.90 1.65 30-year vs 5-year yield 62.20 0.80 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.75 0.25 spread U.S. 3-year dollar swap 7.25 0.25 spread U.S. 5-year dollar swap 3.75 0.25 spread U.S. 10-year dollar swap -2.00 0.25 spread U.S. 30-year dollar swap -25.75 0.25 spread (Reporting by Richard Leong; editing by Jonathan Oatis and Susan Thomas)

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