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TREASURIES-U.S. bond yields rise as ECB says it will trim bond purchases
December 8, 2016 / 3:19 PM / in 8 months

TREASURIES-U.S. bond yields rise as ECB says it will trim bond purchases

4 Min Read

(Updates market action, adds quotes)
    By Richard Leong
    NEW YORK, Dec 8 (Reuters) - U.S. Treasury yields rose on
Thursday in line with their European counterparts after the
European Central Bank said it would trim its monthly pace of
bond purchases to 60 billion euros from 80 billion euros,
starting in April. 
    ECB President Mario Draghi, however, said the unexpected
move was not an outright winding-down of the central bank's
quantitative easing (QE) program, as policymakers would like to
see more evidence of a sustained pickup in inflation in Europe.
    The ECB appeared to have left the door open to further
extend bond purchases and/or increase its monthly purchase pace
in the event the euro zone economy faltered. 
    Traders had worried the central bank would signal a clear
path to wrap up its asset purchase program, propelling bond
yields in Europe and the rest of the world higher.
    "Initially it was disappointing, so we saw yields back up.
We have come off the highs (in yields) as we are digesting the
news. The reality is that they are extending the bond purchase
period to at least December," said Larry Milstein, head of U.S.
government and agency trading at R.W. Pressprich & Co. in New
York. 
    "This isn't going to last forever, but they are saying we
are going to keep doing this until inflation comes back,"
Milstein said, referring to the ECB's QE plans.
    The benchmark 10-year Treasury note's yield was
up 5 basis points at 2.396 percent, retreating from a session
high of 2.427 percent. 
    The 10-year yield held below the 2.492 percent level reached
on Dec. 1, which was its highest since July 2015, according to
Reuters data. 
    The German 10-year Bund yield was up 8 basis points at 0.429
percent.    
December 8 Thursday 10:06AM New York / 1506 GMT
                               Price                  
 US T BONDS MAR7               149-26/32    -1-12/32  
 10YR TNotes MAR7              124-112/256  -0-96/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.4925       0.5       -0.005
 Six-month bills               0.6125       0.6229    -0.005
 Two-year note                 99-198/256   1.1163    0.012
 Three-year note               98-226/256   1.3899    0.020
 Five-year note                99-158/256   1.8308    0.033
 Seven-year note               99-146/256   2.1917    0.046
 10-year note                  96-124/256   2.3998    0.053
 30-year bond                  95-204/256   3.0912    0.062
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        22.25         0.00    
 spread                                               
 U.S. 3-year dollar swap        14.50         0.00    
 spread                                               
 U.S. 5-year dollar swap         0.25         0.00    
 spread                                               
 U.S. 10-year dollar swap      -15.25         0.25    
 spread                                               
 U.S. 30-year dollar swap      -54.00         0.25    
 spread                                               
 
    

    
 (Reporting by Richard Leong; Editing by Lisa Von Ahn and Paul
Simao)

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