November 21, 2018 / 7:27 PM / 6 months ago

TREASURIES-Yields fall after disappointing capital goods data

 (Updates prices)
    * Capital goods orders disappoint
    * Bond moves influenced by stock markets
    * Fed may pause rate hikes in spring - report
    * Bond market closed on Thursday for Thanksgiving

    By Karen Brettell
    NEW YORK, Nov 21 (Reuters) - U.S. Treasury yields fell on
Wednesday after data showed that new orders for U.S.-made
capital goods were weaker than expected, and as stock markets
pared earlier gains.
    Capital goods orders were unexpectedly unchanged in October,
followed a downwardly revised 0.5 percent decline in September.
    “Durable goods was weaker than expected and revised lower
for September,” said Tom di Galoma, a managing director at
Seaport Global Holdings in New York.
    Bonds were also influenced by stock market moves, with
Treasuries selling off overnight and intraday as stock prices
rebounded, before gaining again as stocks came off their session
highs during afternoon trading.
    Stocks saw a tech-led selloff on Monday and Tuesday, which
boosted demand for safe haven bonds, before recovering on
    Traders also cited a report by MNI saying that the Fed may
pause its rate hiking cycle as early as spring as supporting
    “There’s been some news reports that the Fed may hold off on
any kind of further rate hikes in early spring, so I think the
market got a little excited about that in general because if
they do stop hiking, obviously that takes some extraordinary
pressure off rates,” di Galoma said.
    Slowing global growth has increased expectations that the
U.S. central bank will be unable to raise rates much further
without hurting the U.S. economy.
    Benchmark 10-year note yields             fell to 3.065
percent, after rising to 3.088 percent overnight.
    The U.S. Treasury Department on Wednesday sold $11 billion
of 10-year Treasury Inflation Protected Securities (TIPS) at a
yield of 1.109 percent, which was highest yield for this debt
maturity at an auction since January 2011.             
    The bond market will close on Thursday for the Thanksgiving
holiday, and will close early on Friday.

 (Editing by Chizu Nomiyama)
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