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Gertrude Chavez-Dreyfuss

TREASURIES-Yields drop, in tandem with stocks, on global growth woes

14 Dec 2018

* Europe, China cast pall on global growth, weigh on yields * Strong U.S. core retail sales to erase gloom * Despite robust retail sales, spending could slow in 2019-analyst (Adds comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Dec 14 U.S. Treasury yields slid on Friday, in line with declines in U.S. equities, weighed down by worries about global growth after poor economic numbers out of Europe and China. U.S. long-dated yields fell after rising for four straight sessions. On the week, however, their yields were still higher, with benchmark 10-year notes up nearly 4 basis points. Yields, however, limited their fall following a surge in U.S. core retail sales in November, somewhat easing concerns about a potential downturn in the world's largest economy. But risk sentiment had already soured with the European and Chinese data, and it was difficult to reverse the trend in yields even with a strong U.S. number, analysts said. Data showed euro zone business ended the year on a weak note, expanding at the slowest pace in over four years as new order growth all but dried up, hurt by trade tensions and violent protests in France, a survey showed. In China, November retail sales grew at the weakest pace since 2003 and industrial output rose the least in nearly three years, underlining risks to the economy. Global stock markets tumbled following the weak European and Chinese data. "The weakness in stocks had something to do with the rise in U.S. Treasury yields," said Lou Brien, market strategist, at DRW Trading in Chicago. "It seems that relationship is more in tune lately because Treasuries may be sniffing out that stocks may be indicating economic weakness on the horizon," he added. In afternoon trading, U.S. 10-year note yields fell to 2.887 percent from 2.911 percent late on Thursday. U.S. 30-year bond yields were also down at 3.139 percent from 3.148 percent on Wednesday. On the short end of the curve, U.S. 2-year yields traded lower as well at 2.733 percent, compared with Thursday's 2.76 percent. U.S. yields tempered their fall after data showed U.S. retail sales excluding automobiles, gasoline, building materials and food services rose 0.9 percent last month after an upwardly revised 0.7 percent increase in October. Economists polled by Reuters had forecast core retail sales rising 0.4 percent last month. John Hermann, rates strategist at MUFG Securities in New York said, however that the strong surge in consumer spending in the fourth quarter is an "overshoot and there will likely be a sharp "pay-back" in the first quarter of 2019. "If our models forecasts prove accurate, then U.S. economic data may weaken sequentially in the first quarter for many statistics – which may serve to cause the Federal Reserve pause to pause over the first three to four meetings of 2019," he added. December 14 Friday 3:00PM New York / 2000 GMT Price !RIC {UScv1} is invalid !RIC !RIC {UScv1} is {UScv1} invalid is invalid !RIC {TYcv1} is invalid !RIC !RIC {TYcv1} is {TYcv1} invalid is invalid Price Current Net Yield % Change (bps) Three-month bills 2.375 2.4219 0.002 Six-month bills 2.485 2.5509 0.000 Two-year note 100-8/256 2.733 -0.027 Three-year note 99-186/256 2.7207 -0.038 Five-year note 100-174/256 2.7272 -0.027 Seven-year note 100-112/256 2.8052 -0.025 10-year note 102-8/256 2.8877 -0.023 30-year bond 104-128/256 3.1418 -0.020 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 14.50 0.75 spread U.S. 3-year dollar swap 12.50 0.75 spread U.S. 5-year dollar swap 10.25 0.00 spread U.S. 10-year dollar swap 3.00 -0.25 spread U.S. 30-year dollar swap -14.50 0.25 spread (Reporting by Gertrude Chavez-Dreyfuss Editing by Chizu Nomiyama, Jonathan Oatis and Diane Craft)

TREASURIES-Yields fall, in line with stocks, on global growth fears

14 Dec 2018

* Europe, China cast pall on global growth, weigh on yields * Strong U.S. core retail sales to erase gloom * Despite robust retail sales, spending could slow in 2019-analyst (Recasts, adds analyst comments, table, byline, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Dec 14 U.S. Treasury yields retreated on Friday, in line with falls in U.S. equities, weighed down by worries about global growth after poor economic numbers out of Europe and China. U.S. long-dated yields slid after rising for four straight sessions. On the week, however, their yields were still higher, with benchmark 10-year notes up nearly 5 basis points. Yields, however, limited their fall following a surge in U.S. core retail sales in November, somewhat easing concerns about a potential downturn in the world's largest economy. But risk sentiment had already soured with the European and Chinese data, and it was difficult to reverse the trend in yields even with a strong U.S. number, analysts said. Data showed euro zone business ended the year on a weak note, expanding at the slowest pace in over four years as new order growth all but dried up, hurt by trade tensions and violent protests in France, a survey showed. In China, November retail sales grew at the weakest pace since 2003 and industrial output rose the least in nearly three years, underlining risks to the economy. Global stock markets tumbled following the weak European and Chinese data. "The weakness in stocks had something to do with the rise in U.S. Treasury yields," said Lou Brien, market strategist, at DRW Trading in Chicago. "It seems that relationship is more in tune lately because Treasuries may be sniffing out that stocks may be indicating economic weakness on the horizon," he added. In midmorning trading, U.S. 10-year note yields fell to 2.896 percent from 2.911 percent late on Thursday. U.S. 30-year bond yields were also down at 3.152 percent from 3.148 percent on Wednesday. On the short end of the curve, U.S. 2-year yields traded modestly lower at 2.749 percent, compared with Thursday's 2.76 percent. U.S. yields tempered their fall after data showed U.S. retail sales excluding automobiles, gasoline, building materials and food services rose 0.9 percent last month after an upwardly revised 0.7 percent increase in October. Economists polled by Reuters had forecast core retail sales rising 0.4 percent last month. Andrew Hunter, senior U.S. economist at Capital Economics in London, said the boost to real income from lower gasoline prices and the continued strength in the labor market seemed to have provided support to spending growth. But he noted that "with the earlier boost from tax cuts now fading and rising interest rates likely to become an increasing drag, we still expect consumption growth to slow next year." December 14 Friday 10:12AM New York / 1512 GMT Price Current Net Yield % Change (bps) Three-month bills 2.3675 2.4142 -0.006 Six-month bills 2.485 2.5509 0.000 Two-year note 100-2/256 2.7455 -0.014 Three-year note 99-174/256 2.7371 -0.022 Five-year note 100-164/256 2.7357 -0.018 Seven-year note 100-96/256 2.8151 -0.015 10-year note 101-248/256 2.8949 -0.016 30-year bond 104-76/256 3.152 -0.010 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 14.00 0.25 spread U.S. 3-year dollar swap 12.00 0.25 spread U.S. 5-year dollar swap 10.50 0.25 spread U.S. 10-year dollar swap 3.25 0.00 spread U.S. 30-year dollar swap -14.75 0.00 spread (Reporting by Gertrude Chavez-Dreyfuss Editing by Chizu Nomiyama and Jonathan Oatis)

Pantera says some tokens in portfolio likely noncompliant with SEC rules

13 Dec 2018

NEW YORK U.S. blockchain investment firm Pantera Capital said on Thursday approximately a quarter of the fund's capital was invested in projects or digital assets that may not have been compliant with U.S. securities regulations.

TREASURIES-Yields mixed in choppy trading as ECB, stocks weigh

13 Dec 2018

* ECB's Draghi comments weigh on Bunds, Treasuries * U.S. import prices drop as inflation stays benign * U.S. 30-year bond auction shows decent demand (Adds comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Dec 13 U.S. Treasury yields were narrowly mixed on Thursday, generally trading in line with U.S. equities, with investors also focused on the European Central Bank's lower growth and inflation forecasts for next year as well as a warning of economic risks to the region. German 10-year government bond yields fell more than a basis point as ECB President Mario Draghi spoke and was last at 0.264 percent. Other high-grade euro zone bond yields also fell 1-2 basis points in the aftermath of Draghi's comments. U.S. Treasury yields initially moved in line with German Bunds, before the market started moving in tandem with stocks. "The market, over the past month or so, has been highly sensitive to what's going on in stocks," said Tom Simons, money market economist, at Jefferies in New York. "There's no reason why that should change. Now, we're just kind of drifting until we get the next set of macro headlines," he added. The ECB was the market's focus in the U.S. morning session. In a news conference, Draghi said the balance of risks on the growth outlook was moving to the downside due to "geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets, and financial market volatility." The ECB also trimmed its regional growth projection to 1.7 percent and inflation forecast to 1.7 percent for 2019, further spurring buying in both the U.S. and European bond markets A U.S. 30-year bond auction on Thursday saw decent demand, spurring some buying in the afternoon. The bond picked up a yield of 3.165 percent, compared with 3.167 percent at the bid deadline. Bids totaled $36.9 billion for a 2.31 bid-to-cover ratio, better than the weak 2.06 from the November refunding. U.S. yields on Thursday were also pressured by a steeper-than-expected drop in November's U.S. import prices, which followed Wednesday's tame consumer price reading. Both reports backed a growing view that the Federal Reserve could slow the pace of interest rate hikes. Data showed U.S. import prices dropped 1.6 percent last month, the biggest decline since August 2015, after an unrevised 0.5 percent increase in October. In late trading, benchmark U.S. 10-year note yields were at 2.911 percent, from 2.906 percent late on Wednesday. U.S. 30-year bond yields were up at 3.161 percent , from 3.148 percent on Wednesday. On the short end of the curve, U.S. 2-year yields slipped to 2.757 percent, compared with Wednesday's 2.77 percent . Thursday, Dec. 13 at 1510 EST (2010 GMT): Price Current Net Yield Change (pct) (bps) Three-month bills 2.3725 2.4198 -0.008 Six-month bills 2.4875 2.554 0.000 Two-year note 99-252/256 2.7579 -0.012 Three-year note 99-158/256 2.759 -0.014 Five-year note 100-142/256 2.7545 -0.011 Seven-year note 100-72/256 2.8301 0.000 10-year note 101-212/256 2.9113 0.005 30-year bond 104-32/256 3.1607 0.013 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 14.25 1.00 spread U.S. 3-year dollar swap 11.75 0.50 spread U.S. 5-year dollar swap 10.50 0.25 spread U.S. 10-year dollar swap 3.25 0.00 spread U.S. 30-year dollar swap -14.50 -0.25 spread (Reporting by Gertrude Chavez-Dreyfuss Editing by Chizu Nomiyama)

TREASURIES-Yields mixed in narrow ranges as ECB weighs

13 Dec 2018

* ECB's Draghi comments weigh on Bunds, Treasuries * U.S. import prices drop as inflation stays benign * Focus on U.S. 30-year bond auction (Recasts, adds analyst comments, table, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Dec 13 U.S. Treasury yields were mixed on Thursday in choppy trading within narrow ranges, as investors digested the European Central bank's reduced growth and inflation forecasts for next year along with a warning of economic risks to the region. German 10-year government bond yields fell more than a basis point as ECB President Mario Draghi spoke and was last at 0.264 percent. Other high-grade euro zone bond yields also fell 1-2 basis points in the aftermath of Draghi's comments. U.S. Treasury yields initially moved in line with German Bunds, before long-dated debt yields inched higher as U.S. stocks rose. "The market at the moment is focused on the ECB and we're sort of moving in line with Bunds for the most part," said Gennadiy Goldberg, interest rates strategist at TD Securities in New York. In a news conference, Draghi said the balance of risks on the growth outlook was moving to the downside due to "geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets, and financial market volatility." The ECB also trimmed its regional growth projection to 1.7 percent and inflation forecast to 1.7 percent for 2019, further spurring buying in both the U.S. and European bond markets U.S. yields on Thursday were also pressured by a steeper-than-expected drop in November's U.S. import prices, which followed Wednesday's tame consumer price reading. Both reports backed a growing view that the Federal Reserve could slow the pace of interest rate hikes. Data showed U.S. import prices dropped 1.6 percent last month, the biggest decline since August 2015, after an unrevised 0.5 percent increase in October. "This decline extended the downward trend for this core import price measure that has now gone on since May, and prices have been soft in most of the major related subcategories," said Daniel Silver, economist at JP Morgan in New York. "It is likely that the recent dollar appreciation has been weighing on imported inflation and this weakening in import prices also could weigh on domestic inflation," he added. In mid-morning trading, benchmark U.S. 10-year note yields were at 2.905 percent from 2.906 percent late on Wednesday. U.S. 30-year bond yields were up at 3.153 percent , from 3.148 percent on Wednesday. On the short end of the curve, U.S. 2-year yields slipped as well to 2.762 percent, compared with Wednesday's 2.77 percent . Investors are looking toward the $16 billion U.S. 30-year bond auction later in the session, which could see lackluster demand after a soft 10-year note sale on Wednesday and given that 30-year prices have not fallen enough to attract attention. December 13 Thursday 10:18AM New York / 1518 GMT Price Current Net Yield % Change (bps) Three-month bills 2.37 2.4172 -0.011 Six-month bills 2.48 2.5462 -0.008 Two-year note 99-249/256 2.764 -0.006 Three-year note 99-152/256 2.7672 -0.006 Five-year note 100-138/256 2.7578 -0.007 Seven-year note 100-76/256 2.8276 -0.002 10-year note 101-224/256 2.9059 0.000 30-year bond 104-76/256 3.152 0.004 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 13.75 0.50 spread U.S. 3-year dollar swap 11.00 -0.25 spread U.S. 5-year dollar swap 10.25 0.00 spread U.S. 10-year dollar swap 3.25 0.00 spread U.S. 30-year dollar swap -14.25 0.00 spread (Reporting by Gertrude Chavez-Dreyfuss Editing by Chizu Nomiyama and David Gregorio)

TREASURIES-Yields rise on U.S.-China trade, Brexit optimism

12 Dec 2018

* Trump optimism on U.S.-China trade talks lifts yields * Easing Brexit tension helps risk assets * Tame U.S. CPI data dampens rate hike view * U.S. 10-year Treasury note auction shows tepid demand (Adds comment, updates prices, 10-year note auction results) By Gertrude Chavez-Dreyfuss NEW YORK, Dec 12 U.S. Treasury yields climbed on Wednesday on signs of progress in U.S.-China trade discussions and easing tensions on Britain's exit from the European Union after UK Prime Minister Theresa May looked to have garnered enough support to survive a no-confidence vote. U.S. yields rose after steep declines last week amid a slew of geopolitical headlines. Those jitters seem to have waned this week as U.S. long-dated debt sported gains for three straight sessions. In an exclusive interview with Reuters, Trump said on Tuesday China was buying a "tremendous amount" of U.S. soybeans, and bilateral talks were underway by phone, with more meetings likely between both countries. Further adding to the selloff in Treasuries were easing tensions on Brexit, analysts said. At least 158 of May's Conservative party colleagues publicly indicated support for her before a no-confidence vote on Wednesday, enough for a simple majority. "Risk assets appear willing to assume May's eventual survival of a no-confidence vote means forward progress on Brexit," said Jim Vogel, interest rates strategist at FTN Financial in Memphis, Tennessee. "Lots of reasons to be skeptical of that notion, though, the same way it's difficult to see small trade steps with China indicating a longer march to a healthier economic relationship with the U.S.," he added. U.S. Treasury prices also remained lower after a lackluster 10-year auction, picking up a yield of 2.915 percent, higher than that before the bid deadline. The ratio of bids to the amount offered was 2.35, the lowest reading since February. This measure of overall auction demand was 2.54 at November 's 10-year note sale. In afternoon trading, U.S. 10-year note yields rose to 2.902 percent, from 2.881 percent late on Tuesday. U.S. 30-year bond yields were also up at 3.142 percent , from 3.128 percent on Tuesday. On the short end of the curve, however, U.S. two-year yields were slightly down on the day at 2.768 percent, from Tuesday's 2.772 percent. The rise in yields, however, was tempered by a tame reading of U.S. consumer prices last month. Data showed U.S. consumer prices were unchanged in November, the weakest reading in eight months, backing expectations that the Federal Reserve could slow the pace of interest rate hikes next year. The Labor Department said last month's flat reading in the Consumer Price Index followed a 0.3 percent rise in October, and was due to a sharp decline in gasoline prices. Excluding the volatile food and energy components, the CPI rose 0.2 percent, matching October's gain. The data, however, won't prevent the U.S. Federal Reserve from raising interest rates next month, as underlying inflation remained stable. But Andrew Hunter, U.S. economist at Capital Economics in London said the "Fed won't hesitate to move to the sidelines if activity growth begins to slow more sharply." Wednesday, Dec. 12 at 1457 EST (1957 GMT): Price Current Net Yield Change (pct) (bps) Three-month bills 2.38 2.4277 0.000 Six-month bills 2.4875 2.5542 -0.003 Two-year note 99-247/256 2.7682 -0.004 Three-year note 99-150/256 2.77 -0.003 Five-year note 100-136/256 2.7596 0.014 Seven-year note 100-80/256 2.8251 0.020 10-year note 101-232/256 2.9023 0.021 30-year bond 104-124/256 3.1426 0.015 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 13.50 1.50 spread U.S. 3-year dollar swap 11.00 2.00 spread U.S. 5-year dollar swap 10.25 1.00 spread U.S. 10-year dollar swap 3.50 0.00 spread U.S. 30-year dollar swap -14.25 0.00 spread (Reporting by Gertrude Chavez-Dreyfuss Editing by Bernadette Baum and Chizu Nomiyama)

TREASURIES-Yields rise as stocks rally on U.S.-China trade optimism

12 Dec 2018

* Trump optimism on U.S.-China trade talks lifts yields * Easing Brexit tension helps risk assets * Tame U.S. CPI data dampens rate hike view (Recasts, adds comment, table, byline, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Dec 12 U.S. Treasury yields climbed on Wednesday, in tandem with gains in U.S. equities, after President Donald Trump said trade talks with China were progressing and more meetings were likely among officials of both countries. The rise in yields was across the board, with those on U.S. long-dated debt climbing for three straight sessions. In an exclusive interview with Reuters, Trump said on Tuesday China was buying a "tremendous amount" of U.S. soybeans, and bilateral talks were underway by phone, with more meetings likely between both countries. U.S. yields also benefited after the Wall Street Journal reported that China was preparing to replace an industrial policy that will help increase access for foreign companies. "The China headline on granting access to foreign firms is a positive development," said Subadra Rajappa, head of U.S. rates strategy, at Societe Generale in New York. "This is one of the many things that the U.S. had in its negotiation or in the bargaining table with China." Further adding to the selloff in Treasuries was the easing of tensions with respect to Britain's planned exit from the European Union, or Brexit. Prime Minister Theresa May vowed to fight an attempt to unseat her and warned hardline eurosceptic colleagues that they risked delaying or even stopping Brexit https://www.reuters.com/article/us-britain-eu/uk-leader-may-fights-leadership-revolt-warns-brexit-in-peril-idUSKBN1OB0K5. At least 158 of May's Conservative party colleagues publicly indicated support for her before a no-confidence vote on Wednesday, enough for a simple majority. The rise in yields, however, was tempered by a tame reading of U.S. consumer prices last month. Data showed U.S. consumer prices were unchanged in November, the weakest reading in eight months, backing expectations that the Federal Reserve could slow the pace of interest rate hikes next year. The Labor Department said last month's flat reading in its Consumer Price Index followed a 0.3 percent rise in October, and was due to a sharp decline in gasoline prices. Excluding the volatile food and energy components, the CPI increased 0.2 percent, matching October's gain. The data, however, won't prevent the U.S. Federal Reserve from raising interest rates next month, as underlying inflation remained stable. Andrew Hunter, U.S. economist at Capital Economics in London said the CPI report suggested the "Fed won't hesitate to move to the sidelines if activity growth begins to slow more sharply." In late morning trading, U.S. 10-year note yields rose to 2.902 percent, from 2.881 percent late on Tuesday. U.S. 30-year bond yields were also up at 3.141 percent , from 3.128 percent on Tuesday. On the short end of the curve, U.S. two-year yields were also slightly higher on the day at 2.774 percent, from Tuesday's 2.772 percent. December 12 Wednesday 10:36AM New York / 1536 GMT Price Current Net Yield % Change (bps) Three-month bills 2.38 2.4277 0.000 Six-month bills 2.49 2.5568 0.000 Two-year note 99-245/256 2.7723 0.000 Three-year note 99-146/256 2.7755 0.003 Five-year note 100-132/256 2.763 0.017 Seven-year note 100-84/256 2.8227 0.018 10-year note 101-236/256 2.9005 0.020 30-year bond 104-144/256 3.1387 0.011 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 13.50 1.50 spread U.S. 3-year dollar swap 11.00 2.00 spread U.S. 5-year dollar swap 10.25 1.00 spread U.S. 10-year dollar swap 4.00 0.50 spread U.S. 30-year dollar swap -13.50 0.75 spread (Reporting by Gertrude Chavez-Dreyfuss Editing by Bernadette Baum)

TREASURIES-Yields advance as U.S. stocks rally

11 Dec 2018

* China, U.S. discuss next stage of trade talks; boost yields * U.S. producer prices rise in November * Focus on U.S. three-year note auction (Adds comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Dec 11 U.S. Treasury yields rose on Tuesday, as equities bounced amid positive developments in trade negotiations between the United States and China. Yields on U.S. 30-year bonds, which had been diverging from the rest of the market the last few sessions, turned higher in the afternoon after earlier sliding to a three-month low. That still flattened the 5-year and 30-year yield curve on Tuesday, after two sessions of steepening last week. The flatter yield curve reflects persistent worries about geopolitical risks, analysts said. But positive trade headlines have eased some of the global jitters for now, analysts said. On Tuesday, China and the United States discussed a road map for the next stage of their trade talks during a telephone call between Chinese Vice Premier Liu He, U.S. Treasury Secretary Steven Mnuchin, and U.S. Trade Representative Robert Lighthizer. A U.S. Treasury spokesman confirmed the call with Liu took place, but offered no further details. Yields, however, came off their highs after U.S. President Donald Trump openly sparred about government funding with the top two Democratic lawmakers during an Oval Office meeting on Tuesday. "Debt investors trade with one eye on stocks, and almost everyone wishes they averted their eyes rather than tune in the televised meeting between the president and Democrat congressional leaders over funding priorities," said Jim Vogel, interest rate strategist at FTN Financial in Memphis Tennessee. "The exchange between the leaders dampened market enthusiasm about apparent trade progress with China," he added. U.S. 3-year yields, meanwhile, edged higher after a well-received auction of the notes earlier in the session. The 3-year offering was priced at 2.748 percent, compared with 2.750 percent before the bid deadline. That was the lowest yield for this note at an auction since July, Treasury data showed. Bids totaled nearly $98.5 billion for a 2.59 bid-to-cover ratio, a gauge of demand, slightly up from last month's 2.54, even with the $1 billion increase in volume. In late trading, U.S. 10-year note yields edged up to 2.888 percent from 2.856 percent late on Monday. U.S. 30-year bond yields also gained to 3.133 percent from 3.129 percent on Monday. On the short end of the curve, U.S. 2-year yields inched up to 2.780 percent, compared with Monday's 2.727 percent . U.S. data showing an unexpected rise in producer prices last month also nudged yields higher. The producer price index for final demand edged up 0.1 percent last month after jumping 0.6 percent in October. Economists polled by Reuters had forecast PPI to be unchanged in November. Investors are now looking to the $24 billion U.S. 10-year note auction on Wednesday where some expect decent demand. Tuesday, Dec. 11 at 1527 EST (2027 GMT): Price Current Net Yield Change (pct) (bps) Three-month bills 2.38 2.4278 0.005 Six-month bills 2.49 2.5568 0.011 Two-year note 99-241/256 2.7805 0.053 Three-year note 100-68/256 2.7794 0.047 Five-year note 100-144/256 2.7529 0.042 Seven-year note 100-100/256 2.8128 0.040 10-year note 102-8/256 2.888 0.032 30-year bond 104-180/256 3.1316 0.003 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 11.00 -1.50 spread U.S. 3-year dollar swap 8.25 -0.50 spread U.S. 5-year dollar swap 9.00 0.50 spread U.S. 10-year dollar swap 3.00 0.25 spread U.S. 30-year dollar swap -14.50 1.50 spread (Reporting by Gertrude Chavez-Dreyfuss Editing by Chizu Nomiyama and Jonathan Oatis)

TREASURIES-Yields rise as U.S.-China trade tension eases

11 Dec 2018

* China, U.S. discuss next stage of trade talks; boost yields * U.S. producer prices rise in November * Focus on U.S. three-year note auction (Recasts, adds table, comment, byline, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Dec 11 U.S. Treasury yields drifted higher on most maturities except for 30-year bonds, as equities rallied amid positive developments in trade negotiations between the United States and China. Treasury debt prices also sold off ahead of a $38 billion auction of U.S. 3-year notes. Investors generally sell Treasuries ahead of an auction to push the yield higher so they can buy them at a lower price. But positive trade headlines have eased some of the global jitters, analysts said. "Treasuries were better bid in Tokyo but came under pressure in London. Positive U.S.-China trade news has something to do with it," said Justin Lederer, Treasury analyst, at Canto Fitzgerald in New York. China and the United States discussed a road map for the next stage of their trade talks on Tuesday during a telephone call between Vice Premier Liu He, U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer. A U.S. Treasury spokesman confirmed the call with Liu took place, but offered no further details. "The limited information makes it difficult for investors to skew whether or not the event should be interpreted as progress, however the initial risk-on sentiment speaks to the notion that any interaction between two trade partners brings a deal at least incrementally closer," BMO Capital Markets said in a research note. In midmorning trading, U.S. 10-year note yields edged up to 2.862 percent from 2.856 percent late on Monday. U.S. 30-year bond yields, however, fell to 3.112 percent from 3.129 percent on Monday. As a result, the 5-year and 30-year yield curve continued flattening on Tuesday, after two sessions of steepening last week. The flatter yield curve reflects persistent unease about geopolitical risks, analysts said. On the short end of the curve, U.S. 2-year yields inched up to 2.745 percent, compared with Monday's 2.727 percent . U.S. data showing an unexpected rise in producer prices last month nudged yields higher. The Labor Department said its producer price index for final demand edged up 0.1 percent last month after jumping 0.6 percent in October. Economists polled by Reuters had forecast PPI to be unchanged in November and rise 2.5 percent on a year-on-year basis. Investors are now looking to the U.S. 3-year note auction later in the session. Analysts at Action Economics said the note has cheapened a bit in price and is somewhat appealing to investors. The 3-year note has also flattened against longer-dated debt, which, the research firm said, could support its buying at the margin. December 11 Tuesday 10:29AM New York / 1529 GMT Price Current Net Yield % Change (bps) Three-month bills 2.3775 2.4253 0.002 Six-month bills 2.485 2.5516 0.006 Two-year note 100-2/256 2.7456 0.019 Three-year note 100-90/256 2.7486 0.017 Five-year note 100-170/256 2.731 0.020 Seven-year note 100-136/256 2.7905 0.017 10-year note 102-52/256 2.8682 0.012 30-year bond 105-20/256 3.1129 -0.016 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 13.50 1.00 spread U.S. 3-year dollar swap 10.25 1.50 spread U.S. 5-year dollar swap 10.00 1.50 spread U.S. 10-year dollar swap 4.00 1.25 spread U.S. 30-year dollar swap -13.50 2.50 spread (Reporting by Gertrude Chavez-Dreyfuss Editing by Chizu Nomiyama and Jonathan Oatis)

UPDATE 1-Speculators raise net long U.S. dollar bets to near 2-year high -CFTC, Reuters

10 Dec 2018

(Adds comments, details, bitcoin contracts, tabular data) By Gertrude Chavez-Dreyfuss NEW YORK, Dec 10 Speculators boosted net long bets on the U.S. dollar in the latest week to their largest since late December 2016, according to calculations by Reuters and Commodity Futures Trading Commission data released on Monday. The value of the net long dollar position totaled $31.12 billion in the week ended Dec. 4, up from $29.53 billion the previous week. U.S. dollar positioning was derived from net contracts of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars. In a broader measure of dollar positioning that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the U.S. dollar posted a net long position of $32.09 billion, compared with $30.11 billion a week earlier. U.S. dollar positioning has been on the extreme side and could be susceptible to a pullback. The dollar has been on the defensive the last couple of weeks as U.S. Treasury yields declined in the wake of weakening U.S. economic data. That has fueled expectations that the Federal Reserve could slow the pace of its rate hikes, even though investors expect a rate increase at next week's monetary policy meeting. Over the last 20 days, an index that tracks the greenback versus the euro, yen, sterling and three other currencies has fallen about 1.4 percent. On the year, however, the dollar index was still up 5.5 percent. "Underlying dollar sentiment remained in the dumps," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "The dollar has fallen prey to markets' dampened expectations for the Fed to raise rates next year," he added. In the cryptocurrency market, speculators' net short position on bitcoin Cboe futures totaled a record low of 976 contracts in the latest week, down from 979 the previous week, data showed. Bitcoin remains mired in a slump as retail investors have sold their holdings and retreated to the sidelines amid increased regulatory scrutiny of cryptocurrencies by governments. On Monday, bitcoin was down 3.7 percent at $3,404.45 on the Bistamp platform. It has lost about 75 percent of its value so far this year. Japanese Yen (Contracts of 12,500,000 yen) $12.167 billion Dec. 7, 2018 Prior week week Long 32,717 35,817 Short 142,483 140,141 Net -109,766 -104,324 EURO (Contracts of 125,000 euros) $8.618 billion Dec. 7, 2018 Prior week week Long 144,859 149,719 Short 205,635 204,790 Net -60,776 -55,071 POUND STERLING (Contracts of 62,500 pounds sterling) $3.16 billion Dec. 7, 2018 Prior week week Long 43,935 37,930 Short 83,685 77,080 Net -39,750 -39,150 SWISS FRANC (Contracts of 125,000 Swiss francs) $2.481 billion Dec. 7, 2018 Prior week week Long 17,913 16,871 Short 37,708 37,939 Net -19,795 -21,068 CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars) $0.976 billion Dec. 7, 2018 Prior week week Long 38,736 41,427 Short 51,672 50,057 Net -12,936 -8,630 AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars) $3.724 billion Dec. 7, 2018 Prior week week Long 16,743 12,168 Short 67,498 66,071 Net -50,755 -53,903 MEXICAN PESO (Contracts of 500,000 pesos) $-0.11 billion Dec. 7, 2018 Prior week week Long 64,314 77,867 Short 59,791 62,540 Net 4,523 15,327 NEW ZEALAND DOLLAR (Contracts of 100,000 New Zealand dollars) $1.475 billion Dec. 7, 2018 Prior week week Long 17,694 16,373 Short 38,991 36,913 Net -21,297 -20,540 (Reporting by Gertrude Chavez-Dreyfuss Editing by Susan Thomas)

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