(Recasts throughout, updates prices, adds comment)
By Gertrude Chavez-Dreyfuss
NEW YORK, Sept 29 U.S. Treasury debt yields
retreated on Thursday, as risk appetite faded amid fresh
concerns about Deutsche Bank triggered by a news report saying a
number of funds that clear derivative trades with the German
lender have withdrawn excess cash and positions.
U.S. yields, which move inversely to prices, traded higher
all morning as oil prices rose on news OPEC will cut crude
production, but fell sharply on the Deutsche Bank news reported
In response, a Deutsche Bank spokesman said the bank is
confident the vast majority of trading clients understand that
the group has a stable financial position.
Deutsche Bank shares ended 1 percent higher in Europe, but
its American Depositary Receipts (ADRs) which trade in the U.S.
were down nearly 7 percent at $11.44.
"It was all about Deutsche Bank," said Justin Lederer,
Treasury analyst and trader at Cantor Fitzgerald in New York.
"It was a risk-off trade across all most major asset classes.
This was a pretty vicious uptick in Treasuries."
Deutsche Bank, which has spurred a bid for Treasures for
most of this week, has been embroiled in a $14 billion legal
battle with the U.S. government in connection with the bank's
issuance and underwriting of mortgage-backed securities.
Analysts have said the bullish momentum in Treasury prices
remained in place given geopolitical tensions and political
For instance, there is tension in India, which on Thursday
said it conducted "surgical strikes" on suspected militants
preparing to infiltrate from Pakistan-ruled Kashmir, making its
first direct military response to an attack on an army base it
blames on Pakistan and raising the risk of escalation.
Then there is the upcoming U.S. presidential election. Any
indication that Republican candidate Donald Trump is gaining
momentum heading into the election could inject uncertainty into
the market and boost Treasury prices, said Mike Materasso,
co-chair of Franklin Templeton's fixed income policy committee
in New York.
In late trading, U.S. benchmark 10-year Treasury notes
were up 21/32 in price for a yield of 1.558 percent,
down from 1.567 percent late on Wednesday.
U.S. 30-year bonds rose 7/32 in price, yielding 2.277
percent, down from Wednesday's 2.288 percent.
On the front end of the curve, U.S. two-year notes were flat
in price for a yield of 0.742 percent, down from 0.754 percent
The yield curve has also steepened, suggesting global
uncertainty and the upcoming U.S. election will keep the Federal
Reserve on hold for now and prevent investors from buying the
The spread between five-year and 30-year yields widened to
116 basis points on Thursday.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrea Ricci
and Meredith Mazzilli)