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TREASURIES-U.S. yields slip as risk appetite fades
November 17, 2017 / 3:53 PM / a month ago

TREASURIES-U.S. yields slip as risk appetite fades

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 17 (Reuters) - U.S. Treasury yields edged
lower on Friday, in line with falls on Wall Street and declines
in German 10-year bonds, as the yield curve continued to flatten
following strong U.S. housing starts data for October.
    U.S. two-year yields hit a fresh nine-year peak on Friday.
The note has touched the nine-year milestone for the last eight
sessions.
    Global risk appetite took a hit earlier on Friday as U.S.
stocks tumbled, weighed down by losses in financial and
technology stocks. German 10-year bond yields were on pace
for their largest weekly fall in three weeks.
    Yields briefly rose after U.S. housing starts surged 13.7
percent to a seasonally adjusted annual rate of 1.29 million
units, the highest since October 2016.
    "The front end of the curve is building in the greater and
greater probability of Fed rate hikes," said Tom Simons, money
market economist, at Jefferies in New York.
    "This week has been a big week for data prior to the
December meeting, especially CPI (consumer price index). The CPI
didn't necessarily reject the December rate hike thing, and so
people are now more comfortable with that," he added. 
    The upbeat U.S. housing data further flattened the yield
curve.
    The gap between U.S. two-year 10-year yields contracted to
62.8 basis points, its tightest since November
2007. The difference, meanwhile, in five-year and 30-year yields
narrowed to 73.4 basis points.
    "Continued middling inflation and relatively attractive
levels compared to other markets will push a lot of inflows into
the long end of the curve," said Jefferies' Simons.
    In midmorning trading, the 10-year Treasury yield
 fell to 2.350 percent, from 2.361 percent late on
Thursday.
    The U.S. two-year yield climbed to a new
nine-year peak of 1.725 percent. It was last 1.717 percent, from
1.712 percent on Thursday.
    U.S. 30-year bond yields slid to 2.793 percent,
down from Thursday's 2.806 percent.
    
      November 17 Friday 10:31AM New York / 1531 GMT
                               Price                  
 US T BONDS DEC7               153-27/32    0-9/32    
 10YR TNotes DEC7              124-236/256  0-16/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.245        1.2661    0.005
 Six-month bills               1.385        1.4139    0.005
 Two-year note                 99-148/256   1.7214    0.009
 Three-year note               99-198/256   1.8283    0.005
 Five-year note                99-186/256   2.0583    -0.007
 Seven-year note               100-24/256   2.2352    -0.008
 10-year note                  99-24/256    2.3523    -0.009
 30-year bond                  99-28/256    2.794     -0.012
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        16.75        -1.00    
 spread                                               
 U.S. 3-year dollar swap        16.50        -0.25    
 spread                                               
 U.S. 5-year dollar swap         6.00         0.25    
 spread                                               
 U.S. 10-year dollar swap       -1.00        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -23.50         0.25    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss
Editing by Jonathan Oatis)
  

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