June 7, 2018 / 2:52 PM / 2 months ago

TREASURIES-U.S. yields slip as market selloff loses steam

 (Updates market action, adds quote, table, graphics)
    * Concerns on trade push into forefront before G7 summit
    * U.S. jobless claims unexpectedly fall last week
    * Companies raise $33 bln in investment-grade market -IFR

    By Richard Leong
    NEW YORK, June 7 (Reuters) - Most U.S. Treasury yields fell
on Thursday with 10-year yields holding below 3 percent as this
week's bond market selloff faded amid trade tension between
United States and its major trade partners.
    U.S. President Donald Trump stuck to his tough trade stance
against top allies at the G7 summit, which takes place on Friday
and Saturday in Charlevoix, Quebec, after imposing tariffs on
steel and aluminum imports from Canada, Mexico and the European
Union last week.
    Trump's stand rekindled fears of a trade war that could harm
economic growth worldwide, analysts said.
    "Trade tension has been ramping back up. The synchronized
global growth story which we have been speaking about since last
year has frayed a bit," said Ilya Gofshteyn, global macro
strategist at Standard Chartered in New York.
    Renewed trade concerns overshadowed speculation about
whether the European Central Bank will hint its desire next week
to end the expansion of its 2.55 trillion euro ($3 trillion)
bond purchase program in September.
    Traders also awaited possible signs from the Federal Reserve
on how many interest rate increases it could carry out in the
rest of 2018 as domestic labor conditions tighten and inflation
moves closer to its 2 percent goal.
    Earlier on Thursday, the Labor Department said first-time
filings for jobless benefits unexpectedly declined last week to
222,000.
    Traders widely expect the U.S. central bank to raise key
overnight borrowing costs by a quarter point to 1.75
percent-2.00 percent next Wednesday.
    At 10:29 a.m. (1429 GMT), the yield on benchmark 10-year
Treasury notes was down 0.7 basis point at 2.968
percent after touching a near two-week high at 2.994 percent.
    U.S. yields have retraced much of last week's steep drop
tied to political turmoil in Italy. They had moved in step with
their European counterparts on anxiety Italian ruling parties
would implement economic policies that balloon the country's
indebtedness and challenge rules to stay in the euro zone.
    "With Italy more in the rear-view mirror, the view is that
euro zone is still on relatively solid footing," Gofshteyn said.
    The 10-year German Bund yield rose 3 basis
points to 0.490 percent following 9 basis point jump the day
before, which was its biggest one-day rise in nearly a year.  
    This week's heavy supply of higher-yielding corporate bonds
has supported Treasury yields, analysts said.
    So far this week, companies raised about $33.15 billion in
the investment-grade bond market, according to IFR, a unit of
Thomson Reuters.
June 7 Thursday 10:30AM New York / 1430 GMT
                               Price                  
 US T BONDS SEP8               142-23/32    10/32     
 10YR TNotes SEP8              119-84/256   2/32      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.905        1.9407    0.000
 Six-month bills               2.075        2.126     -0.005
 Two-year note                 99-244/256   2.5243    0.004
 Three-year note               99-230/256   2.6609    0.006
 Five-year note                99-184/256   2.8108    -0.002
 Seven-year note               99-184/256   2.9198    -0.005
 10-year note                  99-52/256    2.9681    -0.007
 30-year bond                  100-60/256   3.1128    -0.017
         YIELD CURVE           Last (bps)   Net       
                                            Change    
                                            (bps)     
 10-year vs 2-year yield       44.20        -1.00     
 30-year vs 5-year yield       30.00        -1.05     
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        27.00         0.50    
 spread                                               
 U.S. 3-year dollar swap        22.25         0.25    
 spread                                               
 U.S. 5-year dollar swap        13.50         0.50    
 spread                                               
 U.S. 10-year dollar swap        5.75         0.25    
 spread                                               
 U.S. 30-year dollar swap       -7.75         0.75    
 spread                                               
    

    
 (Reporting by Richard Leong; Editing by Meredith Mazzilli)
  
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