April 15, 2019 / 7:24 PM / 6 months ago

TREASURIES-U.S. long-dated yields edge lower in holiday-shortened week

    * Investors look to U.S. data later this week
    * U.S. economy not nearing a recession-analysts
    * Liquidity, trading seen thinning out this week

 (Adds new comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, April 15 (Reuters) - U.S. long-dated Treasury
yields slipped from four-week highs on Monday in choppy trading,
ahead of U.S. data in a holiday-shortened week that will give
some guidance on whether the world's largest economy could tip
into recession in the near future.
    Financial markets are closed on Friday for the Good Friday
holiday.
    After hitting a roughly 14-month low around late March,  
U.S. benchmark 10-year and 30-year yields have risen about 17
and 16 basis points respectively.
    "I don't think we're nearing recession, but as these things
go, they often pop up out of nowhere," said Lou Brien, market
strategist at DRW Trading in Chicago.
    He cited the U.S. unemployment rate, which has stayed low,
but this metric was quite low going into the last three
recessions anyway. "So it's a lagging indicator in that regard."
    The other interesting thing, Brien said, is that the Federal
Reserve has cut rates ahead of the last three recessions.
    The Fed's shift from a tightening bias to a neutral one,
with the possibility of some easing suggested that if there is
corroborating negative data, the Fed would cut rates.
    "Right now, there is no data to suggest that a cut is
imminent," Brien said.
    U.S. retail sales, industrial production, and housing data
are due this week and Stan Shipley, fixed income strategist at
Evercore ISI in New York, believes those numbers will show a far
more stable economy than many initially thought.
    Due to the short week, liquidity and activity are likely to
be on the light side, analysts said.
    "As a result, it follows that we will continue to monitor
risk asset performance to provide incremental trading guidance
for the Treasury market, at least for the moment," BMO Capital
Markets said in a research note.
    "In that vein, the start to earnings season was rather
impressive as the banks appear to be doing relatively well,
adding to some upward pressure on the equity market as the S&P
500 nears a return to record levels," it added.
    In afternoon  trading, U.S. 10-year note yields slipped to
2.552%, down from 2.56% late on Friday.
    Yields on U.S. 30-year bonds were also lower at 2.964%
, down from 2.971% on Friday.
    On the short end of the curve, U.S. 2-year yields edged
lower to 2.393%, compared with Friday's 2.396%.
    Yields drifted higher earlier after U.S. data showed a
higher-than-expected rise in the New York Fed's Empire State
current business conditions to 10.1 in April, from 3.7 in March.

    
    April 15 Monday 3:10PM New York / 1910 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             2.37         2.4166    -0.024
 Six-month bills               2.3775       2.439     -0.025
 Two-year note                 99-186/256   2.3936    -0.002
 Three-year note               99-176/256   2.3586    0.000
 Five-year note                98-220/256   2.3702    -0.005
 Seven-year note               98-176/256   2.4563    -0.010
 10-year note                  100-160/256  2.5525    -0.007
 30-year bond                  100-176/256  2.965     -0.006
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         9.75         0.00    
 spread                                               
 U.S. 3-year dollar swap         6.50         0.00    
 spread                                               
 U.S. 5-year dollar swap         3.50         0.50    
 spread                                               
 U.S. 10-year dollar swap       -1.25         0.50    
 spread                                               
 U.S. 30-year dollar swap      -24.00         1.00    
 spread                                               
 
 (Reporting by Gertrude Chavez-DreyfussEditing by Susan Thomas
and Cynthia Osterman)
  
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