April 16, 2019 / 2:45 PM / 6 months ago

TREASURIES-U.S. yields advance as risk appetite increases

    By Gertrude Chavez-Dreyfuss
    NEW YORK, April 16 (Reuters) - U.S. Treasury yields rose to
four-week highs on Tuesday, bolstered by gains on Wall Street
that have raised appetite for risk, as well as expectations of
more positive U.S. and Chinese economic data this week.
    In a week shortened by the Good Friday holiday, investors
are awaiting U.S. retail sales data on Thursday, which could
show that the economy is far more stable than expected, analysts
said.
    At the same time, significant Chinese data due late on
Tuesday - gross domestic product, retail sales, among others -
could provide some insight on how the world's second-largest
economy has been performing.
    After a sluggish  start to the year, Chinese reports have
been more upbeat than expected as monetary authorities increased
stimulus measures. That has eased concerns about a Chinese
slowdown.
    "There's the thought that with China's stimulus, people are
going to focus more on Chinese retail sales and the bigger
numbers that we get out of China this evening and without
momentum in Treasuries right now, it's possible that that's
bringing some insurance selling in Treasuries that you wouldn't
necessarily anticipate," said Jim Vogel, interest rates
strategist, at FTN Financial in Memphis, Tennessee.
    He added that this expectation on China draws even more
focus on U.S. retail sales data. "Today's moves are what you
would expect if retail sales numbers are above expectations,"
Vogel said.
    U.S. retail sales for March are expected to rise 0.9%,
following a 0.2% decline in the previous month, according to a
Reuters poll of analysts.
    In late morning trading, U.S. 10-year note yields rose to
2.581%, up from 2.553% late on Monday. Ten-year
yields hit a four-week peak of 2.587%.
    Yields on U.S. 30-year bonds were also higher, at 2.986%
, up from 2.963% on Monday. Thirty-year yields also
touched a four-week high of 2.996%.
    On the short end of the curve, U.S. 2-year yields advanced
to 2.402%, compared with Monday's 2.392%. The note's
yield hit a four-week peak as well of 2.41 percent.
    U.S. yields, however, dipped after data showed U.S.
manufacturing output was unchanged in March after two straight
monthly declines, leading to the largest quarterly decrease in
production since 2017. Economists polled by Reuters had forecast
manufacturing output edging up 0.1 percent in March.

    
      April 16 Tuesday 10:32AM New York / 1432 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             2.3875       2.4355    -0.002
 Six-month bills               2.3925       2.4622    0.002
 Two-year note                 99-182/256   2.4021    0.010
 Three-year note               99-166/256   2.3723    0.013
 Five-year note                98-192/256   2.394     0.024
 Seven-year note               98-128/256   2.4861    0.021
 10-year note                  100-96/256   2.5814    0.028
 30-year bond                  100-72/256   2.9856    0.023
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        10.00         0.25    
 spread                                               
 U.S. 3-year dollar swap         6.75         0.25    
 spread                                               
 U.S. 5-year dollar swap         3.25        -0.25    
 spread                                               
 U.S. 10-year dollar swap       -1.25         0.00    
 spread                                               
 U.S. 30-year dollar swap      -23.75         0.25    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Steve
LOrlofsky)
  
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