December 17, 2019 / 2:46 PM / a month ago

TREASURIES-U.S. Treasury yields tick down on investor caution

    By Ross Kerber
    BOSTON, Dec 17 (Reuters) - U.S. Treasury yields fell
slightly on Tuesday as cautious investors purchased government
debt despite strong U.S. housing data.
    The benchmark 10-year yield fell 1.8 basis
points to 1.8714% in trading on Tuesday morning, after rising
6.8 basis points on Monday. 
    Analysts said the fall in yields could reflect a hesitancy
to take on more risk after Monday's positive moves and new highs
in the stock market.
    "It's the bond market taking a breather after a meaningful
selloff in the last few days," said Subadra Rajappa, head of U.S
rates strategy at Societe Generale. 
    She noted the moves came despite a relatively strong
economic indicator in the housing market. 
    U.S. homebuilding increased more than expected in November
and permits for future home construction surged to a 12-1/2-year
high as lower mortgage rates continued to boost the housing
market and support the broader economy, a Commerce Department
report showed on Tuesday.
    The report also showed the stock of homes under construction
last month was the highest since 2007, which could help to
loosen a supply squeeze that has stalked the housing market.
    Offsetting the positive economic news was a report by Boeing
Co that it would pause production in January of its
best-selling 737 MAX jet, which faces a safety
review.
    The two-year yield, which typically moves in step
with interest rate expectations, was down 2 basis points to
1.6245% on Tuesday.
    
      Dec 17 Tuesday 9:30AM New York / 1430 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.54         1.5719    0.006
 Six-month bills               1.555        1.5935    0.016
 Two-year note                 99-195/256   1.6245    -0.020
 Three-year note               99-238/256   1.6492    -0.019
 Five-year note                99-16/256    1.6982    -0.022
 Seven-year note               98-204/256   1.8099    -0.019
 10-year note                  98-232/256   1.8714    -0.018
 30-year bond                  101-232/256  2.2866    -0.021
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         5.75         1.50    
 spread                                               
 U.S. 3-year dollar swap         1.50         1.00    
 spread                                               
 U.S. 5-year dollar swap        -0.75         1.00    
 spread                                               
 U.S. 10-year dollar swap       -5.25         0.50    
 spread                                               
 U.S. 30-year dollar swap      -29.50         0.25    
 spread                                               
 
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