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7 months ago
TREASURIES-U.S. yields fall on jitters about China, Britain
January 9, 2017 / 5:20 PM / 7 months ago

TREASURIES-U.S. yields fall on jitters about China, Britain

* Worries about yuan, "hard Brexit" spur safety bids for
bonds
    * U.S. to sell $56 billion in longer-dated government debt
    * Fed's Rosengren calls for gradual but faster rate
increases

 (Adds new analyst comments, updates prices)
    By Richard Leong
    NEW YORK, Jan 9 (Reuters) - U.S. Treasury yields fall on
Monday as nervousness about the Chinese yuan and Britain's exit
from the European Union rekindle safe haven demand for low-risk
government bonds ahead of this week's $56 billion supply.
    A falling Chinese currency has stoked worries about the
country's capital outflows. On Saturday, the government said
foreign exchange reserves fell to near a six-year low at the end
of December. 
    China's offshore yuan weakened a bit against the dollar on
Monday following a large increase last week amid speculation the
Chinese central bank pushed up overnight borrowing costs to
quell bearish bets on the currency.
    "People are worried what China is going to do next," said
Thomas Roth, senior Treasury trader at MUFG Securities America
in New York.
    Comments from British Minister Theresa May revived fears
about a "hard Brexit," in which border controls will be given
priority over market access. 
    May said in a television interview on Sunday she was not
interested in Britain keeping "bits" of its EU membership. 
 
    The yield on the benchmark 10-year Treasuries 
was down 3 basis points at 2.385 percent, while the 30-year bond
yield was 3 basis points lower at 2.975 percent. 
    Monday's decline in yields was mitigated as some investors
prepared for this week's supply in longer-dated government
bonds: $24 billion in three-year notes, $20 billion in 10-year
debt and $12 billion in 30-year bonds. 
    A solid U.S. December jobs report has reinforced the view
the Federal Reserve might raise interest rates at a
faster-than-expected pace in 2017.
    Boston Fed President Eric Rosengren said on Monday, "I
expect that appropriate monetary policy will need to normalize
more quickly than over the past year." 
  January 9 Monday 11:30AM New York / 1630 GMT
                               Price                  
 US T BONDS MAR7               152-16/32    0-23/32   
 10YR TNotes MAR7              124-180/256  0-76/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.4975       0.505     -0.015
 Six-month bills               0.57         0.5795    -0.030
 Two-year note                 100-24/256   1.2017    -0.016
 Three-year note               99-190/256   1.4651    -0.019
 Five-year note                100-130/256  1.8925    -0.030
 Seven-year note               100-96/256   2.1917    -0.036
 10-year note                  96-160/256   2.3865    -0.032
 30-year bond                  98-4/256     2.9757    -0.027
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        27.50         0.50    
 spread                                               
 U.S. 3-year dollar swap        21.50         0.25    
 spread                                               
 U.S. 5-year dollar swap         3.75         0.50    
 spread                                               
 U.S. 10-year dollar swap      -12.75         0.25    
 spread                                               
 U.S. 30-year dollar swap      -49.00         0.00    
 spread                                               
 
    

 (Reporting by Richard Leong)

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