April 17, 2019 / 2:42 PM / 6 months ago

TREASURIES-Yields slip as U.S. stocks fall in holiday-shortened week

    By Gertrude Chavez-Dreyfuss
    NEW YORK, April 17 (Reuters) - U.S. Treasury yields drifted
lower from four-week highs on Wednesday, as Wall Street shares
lost steam in a holiday-shortened week and investors got back in
the market after a recent sell-off.
    Financial markets are closed on Friday for the Good Friday
    "Equities are a little bit weaker and that has helped
Treasuries," said Justin Lederer, Treasury trader at Cantor
Fitzgerald in New York. "People also just found levels that they
were willing to step in and are semi-attractive because we have
erased the entire move that started in March."
    Since hitting a more than one-year low in late March after
the Federal Reserve indicated that it will hold off raising
interest rates for now, benchmark U.S. 10-year yields have risen
roughly 27 basis points. 
    Earlier in the session, U.S. yields benefited from upbeat
Chinese data that boosted risk appetite and eased concerns about
a slowdown in the world's second largest economy.
    Data showed China's economy grew at a steady 6.4 percent
pace in the first quarter, as industrial production jumped
sharply and consumer demand showed signs of improvement.

    "There was mostly exuberance earlier on the recent China
data and its overall impact on global growth," said Subadra
Rajappa, head of U.S. rates strategy, at Societe Generale in New
    In morning trading, U.S. 10-year note yields slipped to
2.59%, down from 2.594% late on Tuesday.
    Yields on U.S. 30-year bonds were also down at 2.991%
, from 2.993% on Tuesday.
    On the short end of the curve, U.S. 2-year yields fell to
2.404%, compared with Tuesday's 2.416%.
    U.S. yields earlier extended their rise after data showed 
the U.S. trade deficit fell to an eight-month low in February as
imports from China plunged.
    Overall though, there has been optimism about U.S. economic
prospects and that should push yields higher, analysts said.
    "We have always argued that Treasury yields are rich
compared to fundamentals and now I think there's a little bit of
a catch-up going on," said Societe Generale's Rajappa.
    "Treasury yields are trading in line more with fundamentals.
There's probably also a lot of easing priced in the market," she
      April 17 Wednesday 10:23AM New York / 1423 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             2.39         2.4379    -0.004
 Six-month bills               2.3975       2.4674    0.002
 Two-year note                 99-180/256   2.4064    -0.010
 Three-year note               99-160/256   2.3806    -0.008
 Five-year note                98-182/256   2.4026    -0.006
 Seven-year note               98-112/256   2.4962    -0.005
 10-year note                  100-72/256   2.5922    -0.002
 30-year bond                  100-36/256   2.9927    0.000
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         9.75         0.25    
 U.S. 3-year dollar swap         6.50         0.00    
 U.S. 5-year dollar swap         3.50         0.25    
 U.S. 10-year dollar swap       -1.00         0.25    
 U.S. 30-year dollar swap      -22.75         1.00    
 (Reporting by Gertrude Chavez-Dreyfuss
Editing by Susan Thomas)
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