March 5, 2018 / 3:43 PM / a year ago

TREASURIES-U.S. bond yields fall on trade war rhetoric

    * Yields lower on Trump trade talk
    * Results of Italian election inconclusive 

    By Kate Duguid
    NEW YORK, March 5 (Reuters) - Treasury yields fell on Monday
as prices were bolstered by investors seeking safe-haven bets
amid U.S. President Donald Trump's trade war rhetoric.
    The yield on the benchmark government bond
continued its downward trend from last week driven by
uncertainty about what the tariffs on steel and aluminum
announced on Thursday may mean for the real economy and whether
they may provoke retaliation from U.S. trading partners. 
    China, for example, could take the form of counter-tariffs
or a central bank selloff 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. 
    "That's not my baseline assumption," said Lyngen about
retaliatory tariffs, "but I think it's something that's on the
radar and that’s what the market is worried about at this
    Trump has touted the planned tariffs as a way to revive the
U.S. steel and aluminum industries. This point was reiterated on
Monday by White House Director of Trade and Industrial Policy
Peter Navarro, who told Fox News, "As the president said, we
can't have a country without an aluminum and steel industry."

    At 10:30 a.m. (1530 GMT) the 10-year yield was at 2.842
percent, down 1.5 basis points from Friday's close. 
    The uncertain result of the Italian election also drove U.S.
yields lower, Lyngen said.
    Two anti-establishment leaders made early plays to govern
Italy on Monday, sending ripples across the euro zone after
voters relegated mainstream parties to the sidelines in
delivering a hung parliament.
    With the vote count well advanced and full results due later
on Monday, it looked almost certain that none of the three main
factions would be able to govern alone, and President Sergio
Mattarella is not expected to open formal coalition talks until
early April.
    As the bloc's third-largest economy seemingly faced
prolonged political instability, Italian government bonds
 sold off and the euro was under pressure. 
    Yields were lower along the curve, but all traded within
last week's range. U.S. 2-year Treasury yields were
last at 2.222 percent. The long end was also under pressure with
30-year yields last at 3.119 percent.

    Currency bid prices at 10:26AM (1526 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.2315        $1.2317     -0.02%         +2.66%      +1.2365     +1.2270
 Dollar/Yen       JPY=        105.7300       105.7300    +0.00%         -6.16%      +105.9100   +105.3600
 Euro/Yen         EURJPY=     130.25         130.24      +0.01%         -3.65%      +130.5000   +129.3700
 Dollar/Swiss     CHF=        0.9382         0.9380      +0.02%         -3.71%      +0.9394     +0.9348
 Sterling/Dollar  GBP=        1.3814         1.3802      +0.09%         +2.24%      +1.3834     +1.3768
 Dollar/Canadian  CAD=        1.2972         1.2878      +0.73%         +3.14%      +1.2988     +1.2872
 Australian/Doll  AUD=        0.7737         0.7762      -0.32%         -0.82%      +0.7778     +0.7727
 Euro/Swiss       EURCHF=     1.1556         1.1550      +0.05%         -1.14%      +1.1566     +1.1512
 Euro/Sterling    EURGBP=     0.8915         0.8921      -0.07%         +0.36%      +0.8951     +0.8897
 NZ Dollar/Dolar  NZD=        0.7224         0.7243      -0.26%         +1.95%      +0.7255     +0.7204
 Dollar/Norway    NOK=        7.8328         7.7834      +0.63%         -4.56%      +7.8507     +7.7614
 Euro/Norway      EURNOK=     9.6483         9.5895      +0.61%         -2.03%      +9.6582     +9.5834
 Dollar/Sweden    SEK=        8.2688         8.2473      +0.22%         +0.82%      +8.2910     +8.2366
 Euro/Sweden      EURSEK=     10.1849        10.1629     +0.22%         +3.51%      +10.1872    +10.1480

 (Reporting by Kate Duguid; editing by Grant McCool)
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