April 26, 2018 / 6:57 PM / 4 months ago

TREASURIES-U.S. 10-year yield dips below 3 pct; 7-year auction solid

    * U.S. sells 7-year note at highest yield in eight years
    * Fall in core capital goods offset advance trade, jobless
data
    * ECB's Draghi plays down recent soft data on euro zone
economy

 (Updates market action, adds quote)
    By Richard Leong
    NEW YORK, April 26 (Reuters) - U.S. Treasury yields fell on
Thursday, with the 10-year yield dipping below 3 percent as
buyers emerged following a week-long selloff spurred by concerns
about rising inflation and growing borrowing by the U.S.
government.
    The U.S. Treasury Department sold $29 billion in seven-year
notes to solid investor demand at a yield of 2.952 percent, the
highest in eight years. The seven-year auction marked the final
leg of this week's $96 billion in fixed-rate coupon-bearing
supply. 
    Bidding for the latest wave of Treasury supply reduced
concerns investors have turned more reluctant to buy U.S.
government debt, analysts said. 
    "Each auction went better than the last. All in all, a solid
end to the week's auctions," said John Canavan, market
strategist at Stone & McCarthy Research Associates in New York.
    Thursday's economic figures showed the U.S. economy remains
on a steady growth path but far from firing on all cylinders.
That supported the view the Federal Reserve would stick to its
gradual pace of rate increases and domestic inflation would stay
muted, though edging closer to the Fed's 2 percent goal.
    The Commerce Department said orders for non-defense capital
goods excluding aircraft, a closely watched proxy for business
spending plans, slipped 0.1 percent last month.
    On the other hand, it said the advance goods trade deficit
contracted sharply to $68.04 billion last month from $75.88
billion, reducing the drag on first-quarter economic growth.

    Separately, the Labor Department said the number of
first-time applications for unemployment benefits fell to the
lowest in more than 48 years last week.
    On Friday, the government will offer its initial snapshot of
first quarter U.S. gross domestic product, which analysts polled
by Reuters say likely grew at a 2.0 percent annualized pace.
This was slower than the 2.9 percent rate set in the fourth
quarter of 2017.
    Overseas, European Central Bank President Mario Draghi
played down traders' concerns about recent softness in the euro
zone economy, leaving the door open to end the ECB's 2.55
trillion euro bond purchase program later this year.

    In late afternoon trading, the 10-year Treasury yield
 was down nearly 3 basis points at 2.996 percent. It
touched 3.035 percent on Wednesday, which was its highest since
January 2014, Reuters data showed.
    The two-year yield was marginally higher at 2.492
percent after peaking at 2.508 percent the prior day, a level
last seen in September 2008.
    The 30-year yield was down 3 basis points at
3.178 percent. It reached a two-month high at 3.219 percent on
Wednesday.
   Thursday, April 26 at 1437 EDT (1837 GMT):
                               Price                   
 US T BONDS JUN8               142-11/32    0-19/32    
 10YR TNotes JUN8              119-68/256   0-48/256   
                               Price        Current    Net
                                            Yield      Change
                                            (pct)      (bps)
 Three-month bills             1.8          1.8332     -0.021
 Six-month bills               1.9725       2.0199     -0.010
 Two-year note                 99-198/256   2.4919     0.004
 Three-year note               99-70/256    2.631      -0.005
 Five-year note                99-170/256   2.8225     -0.017
 Seven-year note               97-252/256   2.9487     -0.022
 10-year note                  97-236/256   2.9959     -0.028
 30-year bond                  96-148/256   3.1784     -0.030
                                                       
   DOLLAR SWAP SPREADS                                 
                               Last (bps)   Net        
                                            Change     
                                            (bps)      
 U.S. 2-year dollar swap        25.50        -1.50     
 spread                                                
 U.S. 3-year dollar swap        21.50        -1.00     
 spread                                                
 U.S. 5-year dollar swap        10.75        -0.75     
 spread                                                
 U.S. 10-year dollar swap        2.75         0.00     
 spread                                                
 U.S. 30-year dollar swap      -12.25         0.25     
 spread                                                
 
    
 (Reporting by Richard Leong)
  
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