November 4, 2019 / 7:27 PM / 12 days ago

TREASURIES-Yields rise before Treasury auction, on trade optimism

 (Adds data, updates prices)
    * Treasury to sell $84 bln in notes, bonds this week
    * Trade deal optimism reduces safe haven demand for bonds
    * ISM non-manufacturing data on Tuesday in focus

    By Karen Brettell
    NEW YORK, Nov 4 (Reuters) - U.S. Treasury yields rose on
Monday ahead of this week's Treasury Department debt auctions,
and as risk sentiment improved on optimism about a deal to
de-escalate the U.S.-China trade war.
    The Treasury will sell $84 billion in debt as part of its
quarterly refinancing, including $38 billion in three-year notes
on Tuesday, $27 billion in 10-year notes on Wednesday and $19
billion in 30-year bonds on Thursday.             
    "The market is refocused on the refunding that's going to
take place this week," said Michael Lorizio, senior fixed income
trader at Manulife Asset Management in Boston.
    At the same time, optimism about a U.S.-China trade deal
reduced demand for safe haven U.S. bonds.
    The countries said on Friday they made progress in talks
aimed at defusing a nearly 16-month-long trade war that has
harmed the global economy, and U.S. officials said a deal could
be signed this month.             
    Benchmark 10-year notes             fell 18/32 in price to
yield 1.789%, up from 1.728% late Friday.
    Risk appetite has also improved since U.S. jobs data on
Friday showed that job growth slowed less than expected in
October while wages rose.             
    The next major U.S. economic focus will be the Institute of
Supply Management's (ISM) services report on Tuesday.
    The ISM said on Friday the manufacturing sector contracted
for the third consecutive month in October.             
    However, the service sector "is the larger portion of the
economy and with the weakness that we've seen in ISM
manufacturing if we see any sort of cracks in this measure, then
that could indicate that perhaps the economy is on a weaker
footing than we anticipated," Lorizio said.
    Data on Monday showed new orders for U.S.-made goods fell
more than expected in September and business spending on
equipment was slightly weaker than initially thought, suggesting
that manufacturing remains soft amid the U.S.-China trade war.             
    The Federal Reserve last Wednesday cut interest rates for
the third time this year and indicated that further reductions
may not be forthcoming.             
    Investors remain concerned, however, that a slowing U.S.
economy may force the Fed's hand. 

 (Editing by Susan Fenton; Editing by Richard Chang)
  
 
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