August 7, 2019 / 3:29 PM / 16 days ago

TREASURIES-Recession fears pummel U.S. 30-year yields to near record low

    * U.S. to sell $27 billion 10-year notes at 1 p.m. 
    * Rate cuts by Asian central bank spur more bond buying

 (Updates market action, adds quote, table)
    By Richard Leong
    NEW YORK, Aug 7 (Reuters) - U.S. Treasury yields tumbled on
Wednesday, with 30-year yields nearing record lows, on growing
fears over a global economic downturn and bets the Federal
Reserve would have to pick up its pace of interest rate cuts to
counter growing recession risks.
    A closely watched U.S. recession indicator, the premium on
three-month Treasury bill rates over 10-year Treasury yields
elevated to its highest level since March 2007. 
    Bond yields fell around the world with German yields hitting
record lows in negative territory. That came in the wake of 
several Asian central banks lowering their key interest rates to
address growth concerns stemming from the escalating trade war
between China and United States.
    Rate cuts in New Zealand, India and Thailand touched off a
flood of buying of longer-dated bonds in Asia, which persisted
into European and U.S. trading, analysts said.
    "The delivery of rate cuts from central banks overseas added
fuel to the rally," said Jonathan Cohn, interest rate strategist
at Credit Suisse in New York.
    Torrid demand for Treasuries is expected to support demand
for $27 billion of 10-year government notes for
sale at 1 p.m. ET.
    The 10-year note sale is part of this week's $84 billion
quarterly refunding which is expected to raise $26.7 billion in
cash for new federal spending.   
    In "when-issued" activity, traders expected the latest
10-year note supply to fetch a yield of 1.637%, which would be a
3-year low at a 10-year note auction.
    On the open market, the yields on benchmark 10-year notes
 were 10.20 basis points lower at 1.6365%. They had
fallen earlier to 1.595%, the lowest since October 2016.
    The prices on 30-year or long bonds were up 3 points in
price, putting them on track for a sixth day of gains.
    Thirty-year yields were down 12.20 basis points
at 2.1475% after it hit 2.123% earlier, which was not far from
an all-time low of 2.089% set in July 2016, according to
Refinitiv data.
    Longer-dated Treasuries posted a 6.02% total return over the
prior five days, the biggest such gain since October 2011,
according to an index compiled by Bloomberg and Barclays.

    Interest rates futures suggested traders are building bets
the Fed would cut interest rates three more times by year-end to
avert a recession.
    Investors' anxiety about a recession was underscored by the
inversion between three-month bills and 10-year yields, which 
deepened to 39 basis points, a level not seen since March 2007.
    
August 7 Wednesday 11:17AM New York / 1517 GMT
                               Price                  
 US T BONDS SEP9               163-9/32     73/32     
 10YR TNotes SEP9              130-116/256  22/32     
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.98         2.0176    -0.031
 Six-month bills               1.89         1.94      -0.062
 Two-year note                 100-100/256  1.5487    -0.062
 Three-year note               100-14/256   1.4813    -0.070
 Five-year note                101-88/256   1.4691    -0.077
 Seven-year note               102-40/256   1.5478    -0.084
 10-year note                  106-164/256  1.6365    -0.102
 30-year bond                  115-240/256  2.1475    -0.122
         YIELD CURVE           Last (bps)   Net       
                                            Change    
                                            (bps)     
 10-year vs 2-year yield       8.60         -2.90     
 30-year vs 5-year yield       67.70        -4.00     
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        -2.50        -2.25    
 spread                                               
 U.S. 3-year dollar swap        -5.00        -1.25    
 spread                                               
 U.S. 5-year dollar swap        -7.50        -1.75    
 spread                                               
 U.S. 10-year dollar swap      -12.00        -1.75    
 spread                                               
 U.S. 30-year dollar swap      -40.75        -1.50    
 spread                                               
 
    

 (Reporting by Richard Leong; Editing by Bernadette Baum)
  
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below