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Karen Brettell

TREASURIES-Prices gain as stock markets falter

11 Jan 2019

(Updates prices) * Weak stock markets boosts bond buying * End of new Treasury supply removes weight from market * U.S. consumer prices fell in December By Karen Brettell NEW YORK, Jan 11 U.S. Treasury debt prices gained on Friday as stocks weakened in choppy trading, and as bonds were also helped by the weight of new Treasury supply this week being lifted from the market. Stocks fell after rallying for the past five sessions on hopes of a resolution in the U.S.-China trade dispute and assurances from the Federal Reserve that it would be patient on interest rate hikes. Bonds have benefited from safety buying in recent months when stocks fall. “Stocks are a little weaker. They really have dictated the direction of Treasury trading for a while now,” said Thomas Simons, a money market economist at Jefferies in New York. The U.S. Labor Department said on Friday its Consumer Price Index dipped 0.1 percent last month amid a plunge in gasoline prices, though underlying inflation pressures remained firm as rental housing and healthcare costs rose steadily. Bonds were further aided by the completion of $78 billion this week in new coupon-bearing Treasury supply, which has weighed on longer-dated bonds. Benchmark 10-year notes gained 10/32 in price to yield 2.697 percent, down from 2.731 percent late Thursday. Yields have risen from one-year lows reached a week ago on improving risk appetite since Federal Reserve Chairman Jerome Powell said on Friday that he was aware of the risks of an economic slowdown and that the U.S. central bank will be patient and flexible in policy decisions this year. Powell on Thursday stressed again that the Fed can be patient in approving any further rate increases, saying that "especially with inflation low and under control, we have the ability to be patient and watch patiently and carefully.” The yield curve also steepened after minutes from the Fed’s December meeting, released on Wednesday, showed that a range of policymakers said they could be patient about future rate increases and a few did not support the bank's rate hike that month. Trade talks between the United States and China and the ongoing partial U.S. government shutdown remain headwinds for markets. A trade deal with China could be significant, if reached. “If we get some indication of progress on that front that could really open things up, it could have a pretty dramatic impact on the inflation environment and change expectations for the Fed too,” Simons said. (Reporting by Karen Brettell in New York Editing by James Dalgleish) )

TREASURIES-Prices gain on weak stocks, after consumer price decline

11 Jan 2019

* Weak stock markets boosts bond buying * End of Treasury supply removes weight from market * Consumer prices fell in December By Karen Brettell NEW YORK, Jan 11 U.S. Treasury prices gained on Friday as stocks opened weaker and after data showed a decline in consumer prices during December, while bonds were also helped by the weight of new Treasury supply this week being lifted from the market. Stocks opened lower on Friday after rallying for the past five sessions on hopes of a resolution in the U.S.-China trade dispute and assurances from the Federal Reserve that it would be patient on interest rate hikes. “Stocks are a little weaker. They really have dictated the direction of Treasury trading for a while now,” said Thomas Simons, a money market economist at Jefferies in New York. The Labor Department also said on Friday its Consumer Price Index dipped 0.1 percent last month amid a plunge in gasoline, though underlying inflation pressures remained firm as rental housing and healthcare costs rose steadily. Bonds were further aided by the completion of $78 billion this week in new coupon-bearing Treasury supply, which has weighed on longer-dated bonds. Benchmark 10-year notes gained 9/32 in price to yield 2.699 percent, down from 2.731 percent late Thursday. Yields have risen from one-year lows reached a week ago on improving risk appetite since Federal Reserve Chairman Jerome Powell said on Friday that he was aware of the risks of an economic slowdown and that the U.S. central bank will be patient and flexible in policy decisions this year. Powell on Thursday stressed again that the U.S. central bank can be patient in approving any further rate increases, saying that "especially with inflation low and under control, we have the ability to be patient and watch patiently and carefully.” The yield curve also steepened after minutes from the Fed’s December meeting, released on Wednesday, showed that a range of policymakers said they could be patient about future interest rate increases and a few did not support the central bank's rate increase that month. Trade talks between the United States and China and the ongoing partial U.S. government shutdown remain headwinds for markets. A trade deal with China could be significant, if reached. “If we get some indication of progress on that front that could really open things up, it could have a pretty dramatic impact on the inflation environment and change expectations for the Fed too,” Simons said. (Editing by Susan Thomas) )

TREASURIES-Bonds pare price gains after soft 30-year bond auction

10 Jan 2019

(Adds Powell comments, auction results, updates prices) * Lack of concrete U.S., China trade deal disappoints * Fed's Powell sees "substantially smaller" balance sheet * Weak demand for Treasury's 30-year bond auction By Karen Brettell NEW YORK, Jan 10 U.S. Treasury prices rose on Thursday as stocks weakened in choppy trading, but pared price gains after a soft 30-year bond auction and as Federal Reserve Chairman Jerome Powell said the U.S. central bank will "substantially" reduce the size of its balance sheet. Stocks were hurt after China said trade talks in Beijing with the United States had established a "foundation" to resolve differences, but gave virtually no details on key issues at stake. After clawing their way back into the green, stocks fell again when Powell said the Fed’s balance sheet will be “substantially smaller” than it is now, while also reiterating that the Fed can be patient about raising rates. Powell’s comments on the balance sheet came as the Treasury Department auctioned $16 billion in 30-year bonds to weak demand, which sent longer-dated bond yields to session highs. The ratio of bids to the amount of 30-year bonds offered was 2.19, lower than the 2.31 at the 30-year auction in December. The yield curve also steepened after minutes from the Fed’s December meeting, released on Wednesday, showed that a range of policymakers said they could be patient about future interest rate increases and a few did not support the central bank's rate increase that month. “It was definitely a dovish tone to it, which has aided the front end of the market,” said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. Benchmark 10-year notes gained 3/32 in price to yield 2.719 percent, down from 2.728 percent late Wednesday. The yield curve between two-year and 10-year notes steepened to 16 basis points, from 13 basis points early on Wednesday. Two-year notes are the most sensitive to interest rate policy. (Editing by Steve Orlofsky and Tom Brown) )

TREASURIES-Yields fall on trade deal disappointment, curve steepens on dovish Fed

10 Jan 2019

* Lack of concrete U.S., China trade deal disappoints * Fed's Powell speech on Thursday in focus * Treasury to sell $16 bln 30-year bonds By Karen Brettell NEW YORK, Jan 10 U.S. Treasury yields fell on Thursday as stocks weakened on disappointment that no specifics on resolving the U.S.-China trade dispute emerged from three days of bilateral meetings, while shorter-dated debt outperformed following Wednesday’s dovish Federal Reserve meeting minutes. U.S. stock futures dipped after China said talks in Beijing had established a "foundation" to resolve differences but gave virtually no details on key issues at stake. The yield curve steepened after minutes from the Fed’s December meeting, released on Wednesday, showed that a range of policymakers said they could be patient about future interest rate increases and a few did not support the central bank's rate increase that month. “It was definitely a dovish tone to it, which has aided the front end of the market,” said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. Benchmark 10-year notes gained 4/32 in price to yield 2.715 percent, down from 2.728 percent late Wednesday. The yield curve between two-year and 10-year notes steepened to 16 basis points, from 13 basis points early on Wednesday. Two-year notes are the most sensitive to interest rate policy. A dovish chorus of Fed officials on Wednesday also helped demand for bonds, with policymakers saying they would be cautious about raising interest rates without getting a better handle on how growing risks to an otherwise solid U.S. economic outlook could play out. A speech by Fed Chairman Jerome Powell later on Thursday will next be evaluated for clues on interest rate policy. Longer-dated debt underperformed with the Treasury Department due to sell $16 billion in 30-year bonds on Thursday, the final portion of $78 billion in coupon-bearing supply this week. A $24 billion auction of 10-year notes on Wednesday drew strong demand, following a weak $38 billion sale of three-year notes on Tuesday. (Editing by Steve Orlofsky) )

TREASURIES-Yields fall on dovish Fed speakers, strong auction

09 Jan 2019

(Recasts with Fed speakers, adds Fed minutes, auction results, updates prices) * Fed speakers, meeting minutes seen as dovish * Treasury sells $24 billion 10-year notes to strong demand * Investors optimistic on trade deal between U.S. and China By Karen Brettell NEW YORK, Jan 9 Dovish Federal Reserve speakers and a strong 10-year note auction helped bring Treasury yields down from two-week highs on Wednesday, after optimism that the United States would reach a trade deal with China had earlier boosted risk appetite. Another clutch of Fed policymakers said on Wednesday they would be cautious about raising interest rates without getting a better handle on how growing risks to an otherwise solid U.S. economic outlook could play out. It comes after Fed Chairman Jerome Powell said on Friday he was aware of the risks of an economic slowdown and would be patient and flexible in policy decisions this year. Minutes from the Fed’s December meeting released on Wednesday also showed that a range of policymakers said they could be patient about future interest rate increases and a few did not support the central bank's rate increase that month. “The FOMC minutes are on the dovish side as most of the Fed board felt they could be patient about further rate hikes,” said Tom di Galoma, a managing director at Seaport Global Holdings in New York. “This certainly throws a March tightening out the window.” Benchmark 10-year notes gained 1/32 in price on the day to yield 2.714 percent, after earlier rising to 2.747 percent, the highest since Dec. 28. Market volatility has boosted expectations that the U.S. central bank will not raise rates this year even though the Fed has signaled two hikes are likely. Investors will look for new clues on interest rate policy when Powell speaks on Thursday. Strong demand for a $24 billion in 10-year notes on Wednesday also sent yields lower, a day after the Treasury Department held a weak $38 billion auction of three year notes. Direct bidders, which includes some central banks and large fund managers, bought the largest share of the sale since May 2015. The government will also sell $16 billion in 30-year bonds on Thursday. Benchmark yields hit their highest levels this year earlier on Wednesday on optimism of a trade deal between the U.S. and China, which boosted stocks and reduced demand for safe haven U.S. debt. Chinese and U.S. teams ended trade talks in Beijing on Wednesday that lasted longer than expected and officials said details will be released soon, raising hopes of avoiding an all-out trade war that could badly disrupt the global economy. (Editing by Susan Thomas) )

TREASURIES-Trade deal optimism sends yields to highest levels this year

09 Jan 2019

* 'Sense of optimism' from reports on US-China trade talks * Fed to release minutes from December meeting * Treasury to sell $24 billion 10-year notes By Karen Brettell NEW YORK, Jan 9 U.S. Treasury yields rose to their highest this year on Wednesday as optimism that the United States would reach a trade deal with China boosted risk appetite, and before the Treasury Department was due to sell a new 10-year supply. Chinese and U.S. teams ended trade talks in Beijing on Wednesday that lasted longer than expected and officials said details will be released soon, raising hopes of avoiding an all-out trade war that could badly disrupt the global economy. "There were reports about progress in the China, U.S. trade negotiation, although no deal has been struck yet. Nonetheless there is a sense of optimism associated with that," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York. Stronger stock markets and risk appetite also reduced safe haven demand for bonds. "I think there is still a subset of the market in the 'buy the dip' mentality for risk assets," Lyngen said. Benchmark 10-year notes were last down 7/32 in price to yield 2.740 percent after earlier rising to 2.747 percent, the highest since Dec. 28. The yields have fallen from 3.05 percent at the beginning of December as concerns about slowing global growth and U.S. Federal Reserve interest rate increases prompted a sharp sell-off in stocks. They rose from one-year lows reached last Thursday, however, after Fed Chairman Jerome Powell said on Friday he was aware of the risks of an economic slowdown and would be patient and flexible in policy decisions this year. Investors will look for new clues on interest rate policy when the Fed releases minutes from its December meeting on Wednesday and in a speech by Powell on Thursday. Market volatility has boosted expectations that the U.S. central bank will not raise rates this year even though the Fed has signaled two hikes are likely. The Treasury Department will sell $24 billion in 10-year notes on Wednesday, the second sale of $78 billion in coupon-bearing supply this week. A $38 billion three-year note sale on Tuesday had the lowest ratio of bids to offers since April 2009. The government will also sell $16 billion in 30-year bonds on Thursday. (Editing by Jeffrey Benkoe) )

TREASURIES-Yields rise as trade deal optimism boosts risk sentiment

08 Jan 2019

(Adds auction results, updates prices) * Trump tweets that China trade talks are going well * Three-year note auction sees soft demand By Karen Brettell NEW YORK, Jan 8 U.S. Treasury yields rose for a third day on Tuesday, in line with higher U.S. stocks, as optimism over a trade deal between the United States and China boosted risk appetite. Trade talks will continue in Beijing for an unscheduled third day as the world's two largest economies looked to resolve their bitter trade dispute. U.S. President Donald Trump earlier on Tuesday wrote on Twitter that “Talks with China are going very well!” “I think the market’s reacting to the latest Trump tweet about progress on the China negotiations,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York. Still, uncertainty over whether a deal with China will be struck and concerns about the impact of an ongoing partial U.S. government shutdown were seen as weighing on risk sentiment in the short term. Bond yields and U.S. stocks have risen since Federal Reserve Chairman Jerome Powell on Friday said he was aware of the risks of an economic slowdown and would be patient and flexible in policy decisions this year. That came after a strong U.S. jobs report for December showing employers added 312,000 workers to their payrolls. Benchmark 10-year notes fell 9/32 in price on Tuesday to yield 2.712 percent, up from 2.682 percent on Monday. The yields fell as low as 2.543 percent in overnight trading on Thursday before the jobs report, which was the lowest since January 2018. The yields have tumbled from 3.05 percent at the beginning of December as concerns about slowing global growth and Fed rate increases prompted a sharp selloff in stocks. Market volatility has boosted expectations that the U.S. central bank will not raise rates this year even though the Fed has signaled two hikes are likely. Investors will be looking for new clues on interest rate policy when the Fed releases minutes from its December meeting on Wednesday and in a speech on Thursday by Powell. Yields rose to session highs on Tuesday after the Treasury Department sold $38 billion in three-year notes to relatively soft demand, the first sale of $78 billion in coupon-bearing supply this week. The ratio of bids to notes offered was 2.44, the lowest reading since April 2009. The government will also sell $24 billion in 10-year notes on Wednesday and $16 billion in 30-year bonds on Thursday. (Editing by Bernadette Baum and Meredith Mazzilli) )

TREASURIES-Yields rise as trade deal optimism boosts risk sentiment

08 Jan 2019

* Trump tweets that China trade talks are going well * Treasury to sell $38 bln three-year notes on Tuesday * Higher U.S. stock futures trim demand for low-risk Treasuries By Karen Brettell NEW YORK, Jan 8 U.S. Treasury yields rose for a third day, in line with higher U.S. stock futures, as optimism over a trade deal between the United States and China boosted risk appetite, while the Treasury Department also prepared to sell new supply. U.S. Commerce Secretary Wilbur Ross predicted on Monday that Beijing and Washington could reach a trade deal that "we can live with" as dozens of officials from the world's two largest economies resumed talks in a bid to end their trade dispute. U.S. President Donald Trump on Tuesday also wrote on Twitter that “Talks with China are going very well!” “I think the market’s reacting to the latest Trump tweet about progress on the China negotiations,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York. Still, uncertainty over whether a deal with China will actually be struck and concerns about the impact of an ongoing partial government shutdown were seen as limiting risk appetite in the short term. “Risk sentiment will improve, I think, once we get through these two events over the next few weeks,” Rajappa said. Bond yields and U.S. stocks have gained since Federal Reserve Chairman Jerome Powell on Friday sought to ease market concerns that the U.S. central bank was ignoring signs of an economic slowdown, saying he was aware of the risks and would be patient and flexible in policy decisions this year. That came after a strong jobs report for December where employers added 312,000 workers to their payrolls, the most in 10 months, while average hourly earnings rose 11 cents, or 0.4 percent. Benchmark 10-year notes fell 7/32 in price on Tuesday to yield 2.705 percent, up from 2.682 percent on Monday. The yields fell as low as 2.543 in overnight trading on Thursday before the jobs report, which was the lowest since January 2018. The yields have tumbled from 3.05 percent at the beginning of December as concerns about slowing international growth and Fed rate increases prompted a sharp selloff in stocks. Market volatility has increased expectations that the U.S. central bank will not raise rates again this year and interest rate futures traders are even pricing for the possibility of a rate cut, even though the Fed has signaled that two rate hikes are likely. Investors will be looking for new clues on interest rate policy when the Fed releases minutes from its December meeting on Wednesday and in a speech on Thursday by Powell. The Treasury Department will sell $78 billion in coupon-bearing supply this week, beginning with $38 billion in three-year notes on Tuesday. The government will also sell $24 billion in 10-year notes on Wednesday and $16 billion in 30-year bonds on Thursday. (Editing by Bernadette Baum) )

TREASURIES-Yields rise with stocks as Fed policy, trade talks in focus

07 Jan 2019

(Adds data, updates prices) * Stock gains reduce demand for safe haven bonds * U.S. and China resume trade talks * U.S. Treasury to sell $78 bln supply this week By Karen Brettell NEW YORK, Jan 7 U.S. Treasury prices fell on Monday, extending losses from Friday, as investors evaluated the likelihood of further Federal Reserve rate hikes this year and as the United States and China resumed trade talks. Bond yields rose and stocks rallied on Friday after Fed Chairman Jerome Powell sought to ease market concerns that the U.S. central bank was ignoring signs of an economic slowdown, saying he was aware of the risks and would be patient and flexible in policy decisions this year. That came after December’s jobs report showed that employers added 312,000 workers to their payrolls, the most in 10 months, while average hourly earnings rose 11 cents, or 0.4 percent. “You had a blockbuster payroll number and Powell basically giving the market exactly what it wanted,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. Benchmark 10-year notes fell 6/32 in price to yield 2.680 percent, up from 2.659 percent on Friday. The yields fell as low as 2.543 in overnight trading on Thursday, the lowest since January 2018. The yields have tumbled from 3.05 percent at the beginning of December as concerns about slowing international growth and Fed rate increases prompted a sharp selloff in stocks. Interest rate futures traders are now partially pricing in a rate cut for this year, while the Fed has said that two rate increases are likely. The U.S. central bank will release minutes from its December meeting on Wednesday. Powell is also due to speak on Thursday. Bond yields and stocks pushed higher on Monday even after data was less bullish on the economy, showing that the growth of U.S. services industries slowed to a five-month low in December. Investors are also focused on trade talks between the United States and China. U.S. officials are meeting their counterparts in Beijing this week for the first face-to-face talks since U.S. President Donald Trump and China's President Xi Jinping agreed in December to a 90-day truce in a trade war. The Treasury Department will sell $78 billion in coupon-bearing supply this week, including $38 billion in three-year notes on Tuesday, $24 billion in 10-year notes on Wednesday and $16 billion in 30-year bonds on Thursday. (Editing by Frances Kerry and Lisa Shumaker) )

TREASURIES-Prices inch higher as Fed policy in focus after Friday's selloff

07 Jan 2019

* Prices retrace part of Friday's selloff * U.S. and China resume trade talks * U.S. Treasury to sell $78 bln supply this week By Karen Brettell NEW YORK, Jan 7 U.S. Treasury prices gained on Monday, partially reversing Friday’s losses, as investors evaluated the likelihood of further Federal Reserve rate hikes this year and as the United States and China resumed trade talks. Bond yields rose and stocks rallied on Friday after Fed Chairman Jerome Powell sought to ease market concerns that the U.S. central bank was ignoring signs of an economic slowdown, saying he was aware of the risks and would be patient and flexible in policy decisions this year. That came after December’s jobs report showed that employers added 312,000 workers to their payrolls, the most in 10 months, while average hourly earnings rose 11 cents, or 0.4 percent. “You had a blockbuster payroll number and Powell basically giving the market exactly what it wanted,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. Monday’s move is “a natural retracement from Friday’s very large move,” Goldberg said, adding that there’s also “quite a lot of uncertainty out there, which is why there might have been some investors who are keen to really push rates lower again today.” Benchmark 10-year notes gained 3/32 in price to yield 2.650 percent, from 2.659 percent on Friday. The yields fell as low as 2.543 in overnight trading on Thursday before the jobs report, which was the lowest since January 2018. The yields have tumbled from 3.05 percent at the beginning of December as concerns about slowing international growth and Fed rate increases prompted a sharp selloff in stocks. Interest rate futures traders are now pricing in a partial rate cut for this year, while the Fed has indicated that two rate hikes are likely. Investors are also focused on trade talks between the United States and China. U.S. officials are meeting their counterparts in Beijing this week for the first face-to-face talks since U.S. President Donald Trump and China's President Xi Jinping agreed in December to a 90-day truce in a trade war. The Treasury Department will sell $78 billion in coupon-bearing supply this week, including $38 billion in three-year notes on Tuesday, $24 billion in 10-year notes on Wednesday and $16 billion in 30-year bonds on Thursday. (Editing by Frances Kerry) )

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