December 5, 2019 / 3:12 PM / a month ago

TREASURIES-Yields rise on positive economic reports

    By Ross Kerber
    BOSTON, Dec 5 (Reuters) - U.S. Treasury yields rose on
Thursday as a range of reports indicated continued economic
growth.
    The benchmark 10-year yield was four basis
points higher at 1.8207 in morning trading, reflecting increased
investor appetite for risk.
    Analysts pointed to factors including a fall in weekly
jobless claims and a decline in the U.S. trade deficit, which
suggested trade could contribute to economic growth in the
fourth quarter.
    In addition, oil prices rose on Thursday ahead of an OPEC
meeting expected to lead to deeper output cuts.
    "All the factors are laying out better-than-expected
economic growth," said Stan Shipley, research analyst at
Evercore ISI. "Everything is going one way here," he said.
    The two-year yield typically moves in step with interest
rate expectations. On Thursday morning it was up 1.8 basis
points to 1.6024%.
    Thursday's trading marked the second day of higher yields
after relatively positive comments by U.S. President Donald
Trump raised hopes of a trade agreement with China, the most
unpredictable factor in the market, and Wall Street's main
indexes also rose.
    The Commerce Department said the trade deficit tumbled 7.6%
to $47.2 billion, the smallest since May 2018, as both imports
and exports of goods declined. It was the second straight
monthly fall in the trade bill and the percent drop was the
biggest since January.
    While Washington and Beijing are working on a "phase one"
trade deal, the United States has ratcheted up tensions with
other trade partners.
    Despite the trade tensions there are few signs they are 
affecting the labor market. In a separate report on Thursday,
the Labor Department said initial claims for state unemployment
benefits dropped 10,000 to a seasonally adjusted 203,000 for the
week ended Nov. 30, the lowest since mid-April.
    The claims data has no bearing on November's employment
report, which is scheduled for release on Friday. 
    
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.52         1.5512    -0.008
 Six-month bills               1.5225       1.5598    -0.002
 Two-year note                 99-205/256   1.6024    0.018
 Three-year note               100-4/256    1.6194    0.027
 Five-year note                99-78/256    1.6459    0.040
 Seven-year note               99-36/256    1.7563    0.040
 10-year note                  99-92/256    1.8207    0.040
 30-year bond                  102-100/256  2.2646    0.036
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         1.50         0.25    
 spread                                               
 U.S. 3-year dollar swap        -2.75         0.00    
 spread                                               
 U.S. 5-year dollar swap        -3.25         0.00    
 spread                                               
 U.S. 10-year dollar swap       -7.50         0.25    
 spread                                               
 U.S. 30-year dollar swap      -33.75         0.25    
 spread                                               
 
 (Reporting by Ross Kerber; Editing by Steve Orlofsky
)
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