April 23, 2018 / 1:37 PM / 3 months ago

TREASURIES-U.S. 10-year yield at highest in four years on supply, inflation worry

    * U.S. 10-year yield hits highest level since Jan. 2014
    * U.S. yield curve steepens further from decade flat
    * U.S. to sell $96 billion in coupon-bearing debt
    * Long-term inflation gauges rise to highest since 2014

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, April 23 (Reuters) - U.S. bond prices fell on
Monday, with the 10-year yield hitting its highest in over four
years amid worries about the growing supply of government debt
and accelerating inflation as oil and commodity prices climb.   
    The U.S. Treasury Department will sell a combined $96
billion in coupon-bearing securities this week, starting with
$32 billion in two-year notes on Tuesday.
    At 9:12 a.m. (1312 GMT), the yield on 10-year Treasury notes
 was 2.975 percent, up 2 basis points from late on
Friday. It touched 2.998 percent earlier Monday, which was the
highest since January 2014, Reuters data showed.
    "There are supply concerns. The auction sizes are getting
bigger," said Larry Milstein, head of agency and government
trading at R.W. Pressprich & Co. in New York.
    The Treasury has ramped up its borrowing to fund its
operation following last year's massive tax overhaul and a
two-year budget agreement reached in February.
    An expected jump in Treasuries supply is expected to lift
long-term borrowing costs, not only for the government but also
for consumers.
    The two-year yield was 2.466 percent, nearly 1
basis point higher on the day after hitting 2.478 percent
earlier Monday, which was last seen in September 2008.
    A further selloff in Treasuries steepened the yield curve
from its flattest levels in over a decade set last week.
    The flattening move partly reflected some anxiety among
traders on whether the U.S. economic expansion is running out of
steam as expectations of more increases in short-term rates by
the Federal Reserve might slow business and consumer spending
and investment.
    Meanwhile, some market gauges of U.S. long-term inflation
expectations hit their highest level in at least 3-1/2 years on
Monday, Reuters data showed. 
    The U.S. five-year, five-year inflation swap touched 2.5385
percent in early European trade for the first time since
November 2014. 
    The 10-year inflation breakeven rate, or the yield gap
between 10-year Treasury Inflation Protected Securities and
regular 10-year Treasuries, was 2.19 percent, touching its
highest level since August 2014, Tradeweb and Reuters data
showed.
    Last week, global oil prices climbed to their
highest levels since November 2014 on supply and geopolitical
worries, boosting inflation expectations around the world,
analysts said. On Monday, U.S. crude futures fell more
than 1 percent to $67.39 a barrel.
    The Federal Reserve's Beige Book of regional economic
conditions, released last Wednesday, showed domestic prices grew
across the United States in March through early April.

April 23 Monday 9:15 AM New York/1315 GMT
                               Price                   
 US T BONDS JUN8               142-26/32    -0-9/32    
 10YR TNotes JUN8              119-92/256   -0-48/256  
                               Price        Current    Net
                                            Yield %    Change
                                                       (bps)
 Three-month bills             1.7825       1.815      0.008
 Six-month bills               1.97         2.0169     0.008
 Two-year note                 99-152/256   2.4659     0.009
 Three-year note               99-70/256    2.6304     0.016
 Five-year note                98-144/256   2.8138     0.023
 Seven-year note               98-24/256    2.9306     0.026
 10-year note                  98-24/256    2.9752     0.024
 30-year bond                  97           3.1559     0.014
                                                       
   DOLLAR SWAP SPREADS                                 
                               Last (bps)   Net        
                                            Change     
                                            (bps)      
 U.S. 2-year dollar swap        28.00        -0.25     
 spread                                                
 U.S. 3-year dollar swap        21.75        -0.25     
 spread                                                
 U.S. 5-year dollar swap        11.00        -0.50     
 spread                                                
 U.S. 10-year dollar swap        2.75        -0.50     
 spread                                                
 U.S. 30-year dollar swap      -13.25        -0.75     
 spread                                                
 


 (Additional reporting by Abhinav Ramnarayan in LONDON
Editing by Sujata Rao and 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