September 9, 2019 / 2:11 PM / 8 days ago

TREASURIES-U.S. yields advance as risk sentiment improves

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 9 (Reuters) - U.S. Treasury yields rose
broadly on Monday, with those on 10-year notes climbing to
three-week peaks, as risk appetite improved on expectations that
global central banks will launch stimulus measures to support
their slumping economies.
    U.S. yields overall were higher in two of the last three
sessions as investors grew less nervous about the U.S.-China
trade war. Washington and Beijing have agreed to go back to the
negotiating table. 
    Treasuries are also moving in sympathy with the  European
bond market.
    "It does feel a that sentiment globally is firmer. The
market is expecting some easing from the ECB at its meeting this
week and there has also been a de-escalation of trade tensions,"
said Gennadiy Goldberg, senior rates strategist, at TD
Securities in New York.
    "An ECB easing should weigh on yields, but a lot of
times...you typically would see the market de-risking. If the
expectation is that a quantitative easing program will actually
improve the economy, you should see yields actually move
higher," he added.
    The European Central Bank meets on Thursday. Money markets
show investors expect a 10 basis-point cut in the deposit rate
to -0.50% in the first cut since 2016. Some investors
are betting on a bigger 20 basis-point easing; nearly a quarter
of economists polled by Reuters anticipate this too.
    On Friday, China's central bank cut reserve requirements for
a seventh time since early 2018 to free funds for lending

    Federal Reserve Board Chairman Jerome Powell said on Friday
the U.S. central bank would continue to "act as appropriate" to
sustain U.S. expansion.
    In morning trading, U.S. benchmark 10-year Treasury note
yields rose to 1.618% from 1.55% late on Friday.
Early in the session, the 10-year yields hit a three-week high
of 1.62%.
    Since the beginning of the year, 10-year yields have fallen
more than 100 basis points.
    Yields on 30-year bonds advanced to 2.096% from
2.022% on Friday, up from record lows of 1.905% touched in late
August.
    At the short end of the curve, U.S. two-year yields rose to
1.576% from Friday's 1.528%.
   "Thursday last week was a bit of a pivotal moment," TD's
Goldberg said. "You saw a flash higher in rates on the positive
U.S.-China trade news, and also the strong manufacturing report
from the ISM (Institute for Supply Management). That was
certainly a bit of a turning point, at least in the short term."
    
      September 9 Monday 9:54AM New York / 1354 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.935        1.971     0.007
 Six-month bills               1.835        1.8826    0.011
 Two-year note                 99-219/256   1.5746    0.047
 Three-year note               99-244/256   1.5163    0.052
 Five-year note                98-232/256   1.4789    0.059
 Seven-year note               98-204/256   1.5577    0.060
 10-year note                  100-16/256   1.6181    0.068
 30-year bond                  103-112/256  2.0948    0.073
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        -0.75         0.75    
 spread                                               
 U.S. 3-year dollar swap        -5.00         0.75    
 spread                                               
 U.S. 5-year dollar swap        -6.75         0.50    
 spread                                               
 U.S. 10-year dollar swap      -11.25         0.75    
 spread                                               
 U.S. 30-year dollar swap      -41.25         1.00    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by David
Gregorio)
  
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