March 5, 2018 / 8:48 PM / 13 days ago

TREASURIES-Treasury yields rise with stocks as trade war fears wane

 (Recasts with stocks, trade fears easing; adds quotes, prices,
    * Yields rise as stocks recover 
    * CVS expected to finance Aetna deal with $40 bln supply

    By Kate Duguid
    NEW YORK, March 5 (Reuters) - Treasuries yields rose on
Monday afternoon as the U.S. stock market recovered and fears of
a trade war eased after senior Republicans urged President
Donald Trump to reconsider his threat to impose tariffs on
imported steel and aluminum. 
    U.S. House Speaker Paul Ryan urged the Trump administration
to hold off on implementing new tariffs, citing risks to the
economy. Fellow Republican Kevin Brady, the top House legislator
on trade, said American consumers should not be forced to pay
more for goods.
    President Trump nevertheless said he was not backing down on
the plan, saying he did not think there would be a trade war due
to the tariffs. Trump has touted the planned tariffs as a way to
revive the U.S. steel and aluminum industries. 
    "A trade war on steel and aluminum is going to help a small
number of people and it's going to hurt a lot more and drive up
prices,” said Mary Ann Hurley, vice president, fixed income
trading at D.A. Davidson in Seattle.
    The S&P 500 Index was up 1.2 percent from Friday's
close, with the Dow Jones Industrial Average up 1.4
percent. The yield on the U.S. benchmark government bond
 was last at 2.884 percent, up 2.7 basis points from
its last close.
    Trump's determination to push ahead with a 25 percent tariff
on steel imports and a 10 percent duty on aluminum has prompted
threats of retaliation from the European Union, Canada, China
and Brazil, among others. It roiled world stock markets as
investors worried that a trade war could derail global economic
    Chinese retaliation, for example, could take the form of
counter-tariffs or a central bank sell-off of U.S. Treasuries. 
    "I don’t think a trade war characterized by central bank
dumping of Treasuries is really on the radar. But we could be in
for a period of retaliatory industry-specific tariffs," said Ian
Lyngen, head of U.S. rates strategy at BMO Capital Markets in
New York. 
    The expectation U.S. pharmacy chain CVS Health Corp
would issue over $40 billion in new supply this week to fund its
acquisition of health insurance company Aetna also
boosted yields on Monday. Without an additional bump
in demand, large issuances of debt will drive down prices of
fixed-income products.
    "There are thoughts there is going to be rate-lock selling.
The supply on the corporate end is a factor that’s really
hurting Treasuries," said Hurley. 
    Yields were higher along the curve, but all traded within
last week's range. U.S. 2-year Treasury yields were
last at 2.244 percent. The long end was also under pressure,
with 30-year yields last at 3.16 percent.

    Currency bid prices at 3:29PM (2029 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.2325        $1.2317     +0.06%         +2.74%      +1.2365     +1.2270
 Dollar/Yen       JPY=        106.1700       105.7300    +0.42%         -5.77%      +106.2300   +105.3600
 Euro/Yen         EURJPY=     130.87         130.24      +0.48%         -3.19%      +130.9900   +129.3700
 Dollar/Swiss     CHF=        0.9402         0.9380      +0.23%         -3.50%      +0.9408     +0.9348
 Sterling/Dollar  GBP=        1.3836         1.3802      +0.25%         +2.40%      +1.3876     +1.3768
 Dollar/Canadian  CAD=        1.2992         1.2878      +0.89%         +3.30%      +1.3000     +1.2872
 Australian/Doll  AUD=        0.7760         0.7762      -0.03%         -0.53%      +0.7778     +0.7727
 Euro/Swiss       EURCHF=     1.1589         1.1550      +0.34%         -0.86%      +1.1598     +1.1512
 Euro/Sterling    EURGBP=     0.8907         0.8921      -0.16%         +0.27%      +0.8951     +0.8885
 NZ Dollar/Dolar  NZD=        0.7222         0.7243      -0.29%         +1.92%      +0.7255     +0.7204
 Dollar/Norway    NOK=        7.8250         7.7834      +0.53%         -4.65%      +7.8507     +7.7614
 Euro/Norway      EURNOK=     9.6463         9.5895      +0.59%         -2.05%      +9.6664     +9.5834
 Dollar/Sweden    SEK=        8.2630         8.2473      +0.23%         +0.75%      +8.2910     +8.2366
 Euro/Sweden      EURSEK=     10.1867        10.1629     +0.23%         +3.53%      +10.1920    +10.1480

 (Reporting by Kate Duguid; editing by Grant McCool and Dan
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