December 28, 2018 / 8:11 PM / 6 months ago

TREASURIES-U.S. 10-year yield hovers at 8-month lows as Wall Street stays volatile

    * U.S. Treasuries on track for best month in 2-1/2 years 
    * Treasury funds attract most inflows since February 2015 -
Lipper
    * Pending home sales fall in Nov, Chicago PMI dips in Dec
    * U.S. bond market to close at 2 p.m. EST on Monday

 (Updates market action)
    By Richard Leong
    NEW YORK, Dec 28 (Reuters) - U.S. Treasury yields slipped on
Friday with 10-year yields hovering near eight-month lows as
Wall Street remained volatile, with investors anxious about the
economy and turmoil in Washington including a partial government
shutdown.
    The year-end stampede into safe-haven Treasuries has pushed
the $15.5 trillion sector toward its biggest monthly rally in
2-1/2 years, on track to bring it into positive territory for
2018, according to an index compiled by Bloomberg and Barclays.
    "It's been a move in risk reduction. Treasuries have always
served that role. There's a lot of chaos out there," said Jerry
Paul, senior vice president of fixed income at ICON Advisers in
Denver.
    Wall Street tacked on gains on Friday, building on a late
rally on Thursday. Earlier in the volatile week, the benchmark
S&P 500 index touched a 20-month low. Then on Wednesday,
the S&P 500, the Dow Jones industrial average and Nasdaq
 logged their biggest daily jump in nearly a decade.

    In a sign the stock market might stabilize, U.S. fund
investors shifted $5.2 billion into equity mutual funds and ETFs
for the first time in six weeks, according to research service
firm Lipper late on Thursday.
    Investors also added $4.2 billion in to Treasury funds in
the week ended Dec. 26, the most since February 2015, Lipper
data showed.
    Signs of softening business activity and a flat Treasury
yield curve have raised concerns the U.S. economy might enter a
recession in late 2019. Those worries have stoked bets the
Federal Reserve might stop raising interest rates, analysts
said.
    Domestic pending home sales unexpectedly fell by 0.7 percent
in November, while the Chicago Purchasing Management Index
slipped in December.
    Trade tensions between China and the United States have
added to worries about corporate profits and the economy.
    Still some investors reckoned a tight U.S. labor market and
the massive federal tax cut enacted a year ago would provide an
adequate boost for the economy going into 2019.
    "The economy has too much going for it to have a recession,"
said James Sarni, senior portfolio manager with Payden & Rygel
in Los Angeles.
    Benchmark 10-year Treasury yields were down 0.3
basis point at 2.740 percent after touching 2.720 percent on
Wednesday, which was the lowest level since April 2.
    Two-year yields retested 2.526 percent earlier
Friday, which was the lowest since July 2. They were marginally
lower at 2.534 percent.   
    As of Thursday, the Treasury sector, tracked by Bloomberg
and Barclays, had generated a total return of 1.88 percent in
December, on track for its strongest monthly performance since
June 2016 when it produced a 2.21 percent gain.
    The U.S. bond market will close early at 2 p.m. EST (1900
GMT) on Monday on New Year's Eve and stay shut on Tuesday for
New Year's Day. 
December 28 Friday 3:01PM New York / 2001 GMT
                               Price                  
 US T BONDS MAR9               145-13/32    -4/32     
 10YR TNotes MAR9              121-156/256  3/32      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             2.3425       2.3886    -0.021
 Six-month bills               2.4175       2.4807    -0.018
 Two-year note                 99-239/256   2.5343    -0.014
 Three-year note               100-78/256   2.5172    -0.017
 Five-year note                100-60/256   2.5747    -0.016
 Seven-year note               99-216/256   2.6496    -0.010
 10-year note                  103-76/256   2.7413    -0.002
 30-year bond                  106-96/256   3.0482    0.019
         YIELD CURVE           Last (bps)   Net       
                                            Change    
                                            (bps)     
 10-year vs 2-year yield       20.40        0.15      
 30-year vs 5-year yield       47.20        3.50      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        14.00         0.25    
 spread                                               
 U.S. 3-year dollar swap        10.25         0.75    
 spread                                               
 U.S. 5-year dollar swap         4.75         0.25    
 spread                                               
 U.S. 10-year dollar swap        1.50        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -18.25        -1.25    
 spread                                               
 

    
 (Reporting by Richard Leong; Editing by David Gregorio and Tom
Brown)
  
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