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Ross Kerber

TREASURIES-Yields lower on stimulus deal doubts, more infections

28 Oct 2020

(Updates with market activity, auction results) By Ross Kerber Oct 27 U.S. Treasury yields fell on Tuesday and the yield curve was flatter as hopes faded for an imminent stimulus deal in Washington, while coronavirus infections surged. The benchmark 10-year yield was down 2.7 basis points in afternoon trading at 0.776%. President Donald Trump acknowledged that a coronavirus economic relief deal would likely come after the Nov. 3 election, with the White House unable to bridge differences with fellow Republicans in the U.S. Senate as well as congressional Democrats. Major U.S. stock indexes extended declines from Monday as investors parsed through corporate earnings, took stock of rising coronavirus cases, and braced for volatility. Treasury yields started falling early Tuesday as equity prices rose, a trend that usually prompts a shift out of safe-haven government bonds. But policy factors seemed to play a bigger role, said Eric Jussaume, director of fixed income for Cambridge Trust. "The market wants some sort of stimulus. It's not getting it yet." The U.S Treasury sold $54 billion worth of 2-year notes in an auction whose results essentially matched market demand. Bids from primary dealers accounted for 32% of accepted bids, compared to 31.9% on average, according to a note from Ben Jeffery of BMO Capital Markets. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 63 basis points, about 3 basis points lower than Monday's close and its lowest since Oct. 20. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was unchanged at 0.1494% in afternoon trading. October 27 Tuesday 2:41PM New York / 1841 GMT Price Current Net Yield % Change (bps) Three-month bills 0.095 0.0966 -0.002 Six-month bills 0.105 0.1065 -0.006 Two-year note 99-244/256 0.1494 0.000 Three-year note 99-210/256 0.1858 -0.005 Five-year note 99-152/256 0.3333 -0.016 Seven-year note 98-208/256 0.55 -0.023 10-year note 98-148/256 0.776 -0.027 20-year bond 96-112/256 1.3302 -0.030 30-year bond 95-120/256 1.5658 -0.028 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 6.75 0.00 spread U.S. 10-year dollar swap 2.50 0.00 spread U.S. 30-year dollar swap -34.25 -0.25 spread (Reporting by Ross Kerber in Boston Editing by Nick Zieminski, Jonathan Oatis and Richard Chang)

TREASURIES-Yields lower on stimulus deal doubts

27 Oct 2020

By Ross Kerber Oct 27 U.S. Treasury yields fell on Tuesday and the yield curve was flatter as hopes faded for a stimulus deal in Washington to arrive soon. The benchmark 10-year yield was down 1.5 basis points in morning trading at 0.7877%. The White House said on Tuesday a potential deal on COVID-19 relief could come in "weeks," casting doubt on whether an accord could be struck with Congress before the Nov. 3 election even as U.S. cases of the disease have swelled. The S&P 500 and the Nasdaq opened slightly higher on Tuesday following the benchmark index's worst day in a month as investors parsed through corporate earnings, while bracing for volatility in the run up to the presidential election. Higher equity prices generally move investors out of safer Treasuries. But policy factors seemed to play a bigger role in Tuesday's government bond trading, said Eric Jussaume, director of fixed income for Cambridge Trust. "The market wants some sort of stimulus. It's not getting it yet," he said. Traders also seemed to be buying up Treasuries in anticipation of more volatility tied to voting, he said. Euro zone bond yields also dipped on concerns about rising coronavirus case counts and a lack of progress on U.S. stimulus talks. New orders for key U.S.-made capital goods rose more than expected in September, wrapping up a quarter of potentially record growth in business spending and the economy, thanks to previous fiscal stimulus deals. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 64 basis points, about 2 basis points lower than Monday's close and its lowest since Oct. 20. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was unchanged at 0.1494% in morning trading. Price Current Net Yield % Change (bps) Three-month bills 0.095 0.0966 -0.002 Six-month bills 0.11 0.1116 0.000 Two-year note 99-244/256 0.1494 0.000 Three-year note 99-208/256 0.1885 -0.002 Five-year note 99-144/256 0.3397 -0.009 Seven-year note 98-192/256 0.5593 -0.014 10-year note 98-120/256 0.7877 -0.015 20-year bond 96-64/256 1.3413 -0.019 30-year bond 95-52/256 1.5774 -0.017 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 6.75 0.00 spread U.S. 10-year dollar swap 2.75 0.25 spread U.S. 30-year dollar swap -34.00 0.00 spread (Reporting by Ross Kerber in Boston Editing by Nick Zieminski)

TREASURIES-Yield curve flatter on coronavirus, stimulus concerns

26 Oct 2020

(Updates with market activity, analyst comment, BlackRock commentary) By Ross Kerber Oct 26 Longer-term U.S. Treasury yields fell on Monday as investors sold stocks amid a fast-rising case count in the COVID-19 pandemic and as stimulus talks in Washington dragged on. The benchmark 10-year yield was down 4.3 basis points in afternoon trading at 0.7977%, well below its four-month high reached on Friday. New coronavirus infections touched record levels in the United States recently, with El Paso, Texas, asking citizens to stay at home for the next two weeks, while in Europe, Italy and Spain imposed new restrictions. Equity markets fell and the Dow was on track for its worst day in more than seven weeks. Traders worry additional lockdowns will slow economies, a story the U.S. Treasury market seemed to ignore for much of October, said Jim Barnes, director of fixed income for Bryn Mawr Trust. In addition. investors had hoped for a stimulus deal between Republicans and Democrats that would prop up prices, but that seemed little closer as of Monday. "The market has been having a hard time looking beyond the short-term disagreements" in Washington, Barnes said. Jim Vogel, interest rate strategist for FHN Financial, said another factor in Monday's trading was the difficulty of predicting which party will control the U.S. Senate after the Nov. 3 elections. "There's enough uncertainty with regards to how the Senate elections come out, it's easier to wait rather than sell Treasuries on the expectation of a certain outcome," Vogel said. Democratic control, coupled with a predicted win for the party's presidential candidate Joe Biden, is generally expected to send markets higher on the expectation of an end to Washington gridlock, he said. In a research note on Monday analysts for top asset manager BlackRock Inc wrote they had downgraded U.S. Treasuries and upgraded their inflation-linked counterparts ahead of the election, citing a growing likelihood of fiscal expansion that would occur should Democrats win both the White House and the U.S. Senate. "This electoral outcome would bring forward the market pricing of the higher inflation regime that we were already reflecting in our strategic asset views," BlackRock wrote. A closely watched part of the U.S. Treasury yield curve, measuring the gap between yields on two- and 10-year Treasury notes seen as an indicator of economic expectations, was at 65 basis points, about 4 basis points lower than Friday's close. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down less than a basis point at 0.1494% in afternoon trading. October 26 Monday 2:02PM New York / 1802 GMT Price Price Current Net Yield % Change (bps) Three-month bills 0.0925 0.0938 0.000 Six-month bills 0.11 0.1116 -0.002 Two-year note 99-244/256 0.1494 -0.006 Three-year note 99-208/256 0.1884 -0.014 Five-year note 99-136/256 0.346 -0.024 Seven-year note 98-176/256 0.5685 -0.035 10-year note 98-96/256 0.7977 -0.043 20-year bond 96 1.356 -0.053 30-year bond 94-232/256 1.5902 -0.056 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 8.00 0.25 spread U.S. 5-year dollar swap 6.75 0.00 spread U.S. 10-year dollar swap 2.50 0.00 spread U.S. 30-year dollar swap -34.00 0.50 spread (Reporting by Ross Kerber in Boston Editing by Nick Zieminski/Mark Heinrich)

TREASURIES-Yield curve flatter on coronavirus, election concerns

26 Oct 2020

By Ross Kerber Oct 26 Longer-term U.S. Treasury yields fell on Monday and left the yield curve flatter as investors worried about a fast-rising case count in the COVID-19 pandemic and sized up a complicated battle for control of the U.S. Senate. The benchmark 10-year yield was down 2.7 basis points in morning trading at 0.8144%, well below its four-month high reached on Friday. New infections touched record levels in the United States recently, with El Paso, Texas, asking citizens to stay at home for the next two weeks, while in Europe, Italy and Spain imposed new restrictions. Traders now worry about additional lockdowns in the face of the pandemic that would slow economies, a story the U.S. Treasury market seemed to ignore for much of October, said Jim Vogel, interest rate strategist for FHN Financial. He said investors also were taking note of the tight races that make it hard to predict which party will control the U.S. Senate in next month's elections and holding down Treasury yields. "There's enough uncertainty with regards to how the Senate elections come out, it's easier to wait rather than sell Treasuries on the expectation of a certain outcome," Vogel said. Democratic control, coupled with a predicted win for the party's presidential candidate Joe Biden, is generally expected to send markets higher on the expectation of an end to Washington gridlock, he said. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 66 basis points, about 3 basis points lower than Friday's close. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down less than a basis point at 0.1514% in morning trading. October 26 Monday 9:13AM New York / 1313 GMT Price Price Current Net Yield % Change (bps) Three-month bills 0.0925 0.0938 0.000 Six-month bills 0.1125 0.1141 0.000 Two-year note 99-243/256 0.1514 -0.004 Three-year note 99-202/256 0.1963 -0.006 Five-year note 99-122/256 0.3573 -0.013 Seven-year note 98-148/256 0.5848 -0.018 10-year note 98-56/256 0.8144 -0.027 20-year bond 95-188/256 1.3717 -0.037 30-year bond 94-128/256 1.608 -0.038 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 7.75 0.00 spread U.S. 5-year dollar swap 6.50 -0.25 spread U.S. 10-year dollar swap 2.75 0.25 spread U.S. 30-year dollar swap -34.00 0.50 spread (Reporting by Ross Kerber in Boston Editing by Nick Zieminski)

Analysis: Rating agency scrutiny raises stakes for U.S. election process

21 Oct 2020

BOSTON/NEW YORK As Americans go to the polls, some of the more influential observers of the election process will be the agencies that determine the country's credit rating.

U.S. activists seek data to test corporate diversity pledges

14 Oct 2020

BOSTON/LONDON More data disclosure will help investors, employees and customers judge the pledges many American companies have made to diversify their workforces and boardrooms, activists and analysts said on Tuesday.

Sustainable funds offer downside protection, investors say

13 Oct 2020

BOSTON Using environmental, social or governance (ESG) factors to judge securities can offer protection against losses, helping drive the growth of the sector, several large investors said on Tuesday.

BlackRock backs harmonising sustainability reporting rules

13 Oct 2020

LONDON/BOSTON BlackRock , the world's biggest asset manager, said it supports harmonising sustainability accounting rules and standards globally so investors can better track how companies are transitioning to a lower-carbon economy.

Exclusive: Duke Energy boosts capital spending to fight climate change

09 Oct 2020

BOSTON Top U.S. utility Duke Energy Corp plans billions of dollars of new spending this decade as it ramps up efforts to slash greenhouse gas emissions, executives told Reuters.

Senate Democrats question BlackRock climate commitment

09 Oct 2020

BOSTON/LONDON Five Democratic U.S. senators on Thursday asked BlackRock Inc to justify why it rarely supported shareholder resolutions tied to climate change issues despite its increased focus on the environment this year.

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