June 5, 2019 / 2:52 PM / 3 months ago

UPDATE 1-US Treasury trading volumes in May approaches record high- Tradeweb

(Updates to show volume was just off record high)

June 5 (Reuters) - Daily U.S. Treasury trading volumes surged in May on the Tradeweb bond platform to approach record highs, as markets ramped up bets the Federal Reserve would cut interest rates sooner than expected.

Tradeweb said on Wednesday average daily volume (ADV) in U.S. Treasuries was $83.6 billion, a 23.6% rise on the previous month and the highest since March, when the ADV on its platform hit a record high of $84.9 billion.

Treasury yields have fallen sharply in recent months, with 10-year yields declining around 35 basis points over May , as an intensifying Sino-U.S. trade and tech war sent investors scurrying for “safe-haven” government debt.

The trade war and a raft of gloomy data heightened recession fears, leading markets to ramp up rate-cut bets — four cuts are priced in between now and mid-2020, according to the CME Group’s FedWatch programme.

The jump in trading volumes of Treasuries pushed up overall bond ADV to a new monthly record of $741.8 billion, up 38.7% on the year, the platform said, adding:

“The strong volumes were driven by a rise in trading of short-term tenors, as well as continued growth in overall trading activity.”

The ADV of repurchase agreements or repos marked a milestone, surpassing $200 billion for the first time since March 2009, a 43.7% rise on year-ago levels, the data showed.

Tradeweb also noted a steady rise in trading of Chinese debt - May ADV was $859 million it said, an 85.7% year-on-year increase. (Reporting by Sujata Rao; Editing by Dhara Ranasinghe)

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