April 16, 2019 / 6:26 PM / 2 months ago

TREASURIES-U.S. yields climb to 4-week peaks as risk appetite improves

    * Markets await major Chinese data
    * U.S. retail sales seen rising 0.9 percent in March
    * U.S. industrial production comes out flat, weighs on
yields

 (Adds new comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, April 16 (Reuters) - U.S. Treasury yields rose to
four-week highs on Tuesday, bolstered by increased risk appetite
that has pushed Wall Street shares higher, 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, major Chinese data due late on Tuesday -
gross domestic product, retail sales, among others - could
provide some insight into how the world's second-largest economy
has been performing.
    After a sluggish start to the year, Chinese numbers have
been more upbeat than expected as monetary authorities increased
stimulus measures. That has eased concerns about a China
economic 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 of China drew 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 afternoon trading, U.S. 10-year note yields rose to
2.590%, up from 2.553% late on Monday. Ten-year
yields hit a four-week peak of 2.596%.
    "We kind of moved into this range of 2.40-2.60 percent range
in the 10-year. It seems hard for me to believe that the 10-year
could get a lot lower," said Jerry Paul, senior vice president
and fixed income portfolio manager at ICON Advisers in Denver.
    "I will be cautious with any 10-year exposure until we get
into the high twos in yield," he added.
    Yields on U.S. 30-year bonds were also higher, at 2.991%
, up from 2.963% on Monday. Thirty-year yields also
touched a four-week high of 2.998%.
    On the short end of the curve, U.S. 2-year yields advanced
to 2.41%, compared with Monday's 2.392%. The note's
yield hit a four-week peak as well of 2.412 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.
    
      April 16 Tuesday 2:15PM New York / 1815 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             2.385        2.433     -0.004
 Six-month bills               2.39         2.4596    0.000
 Two-year note                 99-179/256   2.4083    0.016
 Three-year note               99-160/256   2.3805    0.022
 Five-year note                98-184/256   2.4008    0.031
 Seven-year note               98-116/256   2.4936    0.029
 10-year note                  100-80/256   2.5886    0.036
 30-year bond                  100-40/256   2.9919    0.029
                                                      
   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         3.25        -0.25    
 spread                                               
 U.S. 10-year dollar swap       -1.50        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -24.00         0.00    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Steve
Orlofsky)
  
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