January 14, 2020 / 2:29 PM / 9 days ago

TREASURIES-U.S. yields steady as investors weigh moderate CPI rise

    By Ross Kerber
    BOSTON, Jan 14 (Reuters) - U.S. Treasury yields were little
changed on Tuesday as investors took stock of a moderate rise in
consumer prices and the expected signing of a trade deal between
the United States and China.
    The benchmark 10-year  yield was down less than
a basis point in morning trading at 1.8406%.
    Euro zone bond yields also inched down on Tuesday in what
analysts said was largely repositioning by investors.

    Consumer prices rose slightly less than expected in December
and monthly underlying inflation pressures retreated, which
could allow the Federal Reserve to keep interest rates unchanged
at least through this year.
    The Labor Department said on Tuesday its consumer price
index increased 0.2% last month, 10 basis points less than
expected by economists polled by Reuters.
    The market's slight reaction to the data suggested investors
expect little change in the Fed's long-term strategy, said Lou
Brien, market strategist for DRW Trading.
    "The data was muted, and muted data at this stage of the
game means the Fed will be on the sidelines for an extended
period," he said.
    The United States and China, the world's two biggest
economies, are just a day away from signing a Phase 1 trade
agreement. In a sign of easing tensions, the Treasury said on
Monday that China should no longer be designated a currency
manipulator.
     Wall Street was set to open largely flat on Tuesday, as
investors took a breather following a record rally on trade
optimism, while top U.S. banks reported mixed quarterly
results.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down less
than a basis point at 1.5842% in morning trading.
    
    January 14 Tuesday 9:18AM New York / 1418 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.535        1.5667    0.003
 Six-month bills               1.5325       1.5703    -0.003
 Two-year note                 100-20/256   1.5842    -0.002
 Three-year note               99-186/256   1.5937    -0.008
 Five-year note                100-130/256  1.6429    -0.008
 Seven-year note               99-248/256   1.7547    -0.012
 10-year note                  99-48/256    1.8406    -0.007
 30-year bond                  101-164/256  2.2986    -0.008
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         5.50        -0.25    
 spread                                               
 U.S. 3-year dollar swap         2.00         0.00    
 spread                                               
 U.S. 5-year dollar swap        -0.75         0.00    
 spread                                               
 U.S. 10-year dollar swap       -5.25         0.25    
 spread                                               
 U.S. 30-year dollar swap      -32.00         0.50    
 spread                                               
 
    




 (Reporting by Ross Kerber; editing by Nick Macfie)
  
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