* Bonds gain on falling stocks, oil
* Yield curve flattest in eight weeks
* Bond market to close early on Friday
By Karen Brettell
NEW YORK, Nov 23 (Reuters) - Benchmark U.S. Treasury yields
fell to eight-week lows on Friday and the yield curve flattened,
as falling stock and oil prices increased safe haven buying of
long-dated U.S. government bonds.
U.S. stocks fell as oil prices hit their lowest in a year,
while investors were nervous ahead of U.S.-China trade talks at
the G20 summit next week.
“We’re seeing a bit of a continuation to the destructive
price action that we’ve seen in risk assets and oil, and that’s
blown back to Treasuries,” said Mike Lorizio, head of Treasuries
trading at Manulife Asset Management in Boston.
Benchmark 10-year notes gained 8/32 in price to
yield 3.034 percent, down from 3.061 percent on Wednesday and
the lowest since Sept. 28.
The bond market was closed on Thursday for the Thanksgiving
holiday and will close early on Friday at 2:00 p.m. EST (1900
GMT).
The 10-year Treasury yields have fallen from 3.25 percent on
Nov. 7 as tumbling stock markets increased demand for low risk
debt.
Shorter-dated debt underperformed on Friday, however, as
expectations of further rate hikes by the Federal Reserve kept
pressure on the notes, which are highly sensitive to rate moves.
Two-year note yields have fallen to 2.803 percent
from 2.977 percent on Nov. 8 as falling stocks and weakening
global growth raised some doubts that the U.S. central bank will
be able to continue its rate hike cycle much further without
damaging the economy.
However, “the U.S. economy has not shown any signs of
weakness or any signs of changing the current trajectory. With
that in mind the front-end of the curve has probably gone about
as far as it can,” said Lorizio.
The yield curve between two-year and 10-year notes
flattened to 22.60 basis points, the lowest level
since Sept. 28.
The Federal Reserve will release minutes from its November
meeting on Wednesday.
Futures traders are pricing in a 72 percent chance of a
December rate hike, according to the CME Group’s FedWatch Tool.
(Editing by Chizu Nomiyama)
)