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United Kingdom

Karen Brettell

TREASURIES-Yields rise on report Britain, EU close to Brexit deal

15 Oct 2019

(Recasts with yield increase, updates prices) * Hopes of Brexit deal boosts risk appetite * Optimism on U.S.-China trade deal fades * Fed seen likely to cut rates later this month By Karen Brettell NEW YORK, Oct 15 U.S. Treasury yields rose to a three-week high on Tuesday on a report that British and European Union negotiators were close to a deal for Britain to exit the European Union, spurring an increase in risk taking and reducing demand for safe haven debt. Bloomberg News reported that negotiators were closing in on a draft deal, with hopes an agreement will be reached by midnight. Two EU officials told Reuters, however, that any discussion that the two sides are close to agreeing to a text of a Brexit deal is “premature.” Benchmark 10-year yields rose as high as 1.773%, the highest since Sept. 20, and up from 1.753% late Friday. The bond market was closed on Monday for the Columbus Day holiday. The news overturned an earlier rally in Treasury prices, as investors pared back expectations that the United States and China are close to reaching an agreement to end their trade war. Reports of a "Phase 1" trade deal between the United States and China last week increased risk appetite. However the dearth of details around the agreement has since curbed this enthusiasm. U.S. Treasury Secretary Steven Mnuchin said on Monday that an additional round of tariffs on Chinese imports will likely be imposed if a trade deal with China is not reached but added that he expected the agreement to go through. “Any good news was going to bring a big reaction and the idea that the U.S. sort of oversold the accomplishment wasn’t a complete surprise either, and was perhaps factored in to some of the reaction last week,” said Jim Vogel, an interest rate strategist at FTN Financial in Memphis, Tennessee. Retail sales data on Wednesday is the next major economic focus and will be evaluated for the strength of U.S. consumer confidence. The Federal Reserve is expected to cut rates when it meets on October 29-30 though Fed policymakers are divided on whether further cuts are needed for the economy. Price Current Net Yield % Change (bps) Three-month bills 1.64 1.6738 -0.008 Six-month bills 1.625 1.6653 -0.016 Two-year note 99-197/256 1.6201 0.006 Three-year note 99-86/256 1.6028 0.017 Five-year note 99-142/256 1.5937 0.017 Seven-year note 99-168/256 1.6775 0.010 10-year note 98-192/256 1.764 0.011 30-year bond 100-124/256 2.2276 0.014 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 4.25 -0.25 spread U.S. 3-year dollar swap 0.75 -0.50 spread U.S. 5-year dollar swap -0.75 -0.25 spread U.S. 10-year dollar swap -7.75 0.50 spread U.S. 30-year dollar swap -37.50 0.50 spread (Editing by Nick Zieminski)

TREASURIES-Yields fall as trade deal optimism ebbs

15 Oct 2019

* Yields lower as optimism on U.S. China trade deal fades * Fed seen likely to cut rates later this month * Brexit negotiations in focus By Karen Brettell NEW YORK, Oct 15 U.S. Treasury yields edged lower on Tuesday as investors pared back expectations that the United States and China are close to reaching an agreement to end their trade war. Reports of a "Phase 1" trade deal between the United States and China last week encouraged risk taking and reduced demand for safe-haven debt, however the dearth of details around the agreement has since curbed this enthusiasm. U.S. Treasury Secretary Steven Mnuchin said on Monday that an additional round of tariffs on Chinese imports will likely be imposed if a trade deal with China is not reached, but added that he expected the agreement to go through. “Any good news was going to bring a big reaction and the idea that the U.S. sort of oversold the accomplishment wasn’t a complete surprise either, and was perhaps factored in to some of the reaction last week,” said Jim Vogel, an interest rate strategist at FTN Financial in Memphis, Tennessee. Benchmark 10-year yields rose to a three-week high of 1.767% on Friday, before dropping to 1.720% on Tuesday. The bond market was closed on Monday for the Columbus Day holiday. Retail sales data on Wednesday is the next major economic focus and will be evaluated for the strength of U.S. consumer confidence. The Federal Reserve is expected to cut rates when it meets on October 29-30 though Fed policymakers are divided on whether further cuts are needed for the economy. Investors are also focused on Europe where officials from Britain and the EU will meet at a summit on Thursday and Friday that will determine whether Britain is headed for a deal to leave the bloc on Oct. 31, a disorderly no-deal exit or a delay. Price Current Net Yield % Change (bps) Three-month bills 1.64 1.6738 -0.008 Six-month bills 1.6275 1.6679 -0.013 Two-year note 99-215/256 1.5834 -0.031 Three-year note 99-120/256 1.5571 -0.029 Five-year note 99-202/256 1.5443 -0.033 Seven-year note 99-248/256 1.6297 -0.038 10-year note 99-36/256 1.7203 -0.033 30-year bond 101-12/256 2.2019 -0.012 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 4.50 0.00 spread U.S. 3-year dollar swap 1.25 0.00 spread U.S. 5-year dollar swap -0.75 -0.25 spread U.S. 10-year dollar swap -8.25 0.00 spread U.S. 30-year dollar swap -38.50 -0.50 spread (Editing by Nick Zieminski)

Dollar gains as doubts weigh on U.S.-China trade deal, Brexit

14 Oct 2019

NEW YORK The U.S. dollar rose on Monday, after two days of losses, attracting safe-haven bids, as optimism waned about a trade deal between the United States and China, and investors fretted about the ongoing twists and turns on Britain's exit from the European Union.

FOREX-Safe havens gain as U.S.-China trade deal hopes ebb

14 Oct 2019

* Safe havens U.S. dollar, Swiss franc, yen gain * Sterling falls as EU, Britain pursue Brexit deal * Asian and U.S. holidays seen limiting trade volumes (Updates trading and comments to U.S. market open, new byline, changes dateline, previous LONDON) By Karen Brettell NEW YORK, Oct 14 Safe-haven currencies including the U.S. dollar gained on Monday as optimism over a trade deal between the United States and China ebbed. The greenback, Swiss franc and Japanese yen all weakened on Friday as optimism over the trade talks, together with the European Union and Britain restarting Brexit negotiations, encouraged investors into riskier assets. U.S. President Donald Trump on Friday outlined the first phase of a deal to end the trade war and suspended a threatened tariff hike, but officials on both sides said much more work needed to be done before an accord could be agreed. The safe havens gained on Monday, however, after Bloomberg News reported that China wants more talks as soon as the end of October to hammer out the details of the “phase one” deal. U.S. Treasury Secretary Steven Mnuchin also said on Monday that an additional round of tariffs on Chinese imports will likely be imposed if a trade deal with China has not been reached by the time they are set to start, but added that he expected the agreement to go through. Analysts said the partial deal between the world's two largest economies appeared to lack substance with limited progress on structural issues such as technology transfers. Manuel Oliveri, an analyst at Credit Agricole, said the announcements so far did not amount to "a broad-based trade deal" that would justify last week's market optimism. The dollar index against a basket of six major currencies gained 0.20 percent to 98.501, up from a three-week low of 98.197 reached on Friday. Trading volumes are likely lighter than usual with Tokyo's market closed for a public holiday and a holiday in the United States for Columbus Day. Emerging market currencies and those closely linked to broad risk sentiment, such as the Australian dollar and Swedish crown, slipped, after rallying at the end of last week. Sterling also dropped against both the dollar and euro , after Britain and the EU stressed over the weekend that there was a long way to go before they could agree a Brexit deal. Sterling surged late last week after London and Brussels announced "intense" negotiations to try and agree a Brexit deal before Oct. 31. ======================================================== Currency bid prices at 9:27AM (1327 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1020 $1.1040 -0.18% -3.91% +1.1048 +1.1014 Dollar/Yen JPY= 108.3100 108.4000 -0.08% -1.77% +108.5200 +108.0500 Euro/Yen EURJPY= 119.38 119.62 -0.20% -5.42% +119.6900 +119.2000 Dollar/Swiss CHF= 0.9964 0.9965 -0.01% +1.54% +0.9983 +0.9945 Sterling/Dollar GBP= 1.2577 1.2647 -0.55% -1.41% +1.2653 +1.2518 Dollar/Canadian CAD= 1.3225 1.3196 +0.22% -3.02% +1.3227 +1.3192 Australian/Doll AUD= 0.6750 0.6787 -0.55% -4.26% +0.6801 +0.6752 ar Euro/Swiss EURCHF= 1.0983 1.0998 -0.14% -2.41% +1.1010 +1.0972 Euro/Sterling EURGBP= 0.8762 0.8729 +0.38% -2.47% +0.8811 +0.8726 NZ NZD= 0.6280 0.6336 -0.88% -6.51% +0.6335 +0.6282 Dollar/Dollar Dollar/Norway NOK= 9.1207 9.0791 +0.46% +5.58% +9.1239 +9.0738 Euro/Norway EURNOK= 10.0529 10.0187 +0.34% +1.48% +10.0707 +10.0161 Dollar/Sweden SEK= 9.8333 9.8029 +0.16% +9.70% +9.8608 +9.8045 Euro/Sweden EURSEK= 10.8384 10.8213 +0.16% +5.60% +10.8670 +10.8183 (Reporting by Karen Brettell; Additional reporting by Tommy Wilkes in London; Editing by Andrea Ricci)

Euro drops to 28-month low on growth concerns

30 Sep 2019

NEW YORK The euro fell to its lowest in two-and-a-half years against the U.S. dollar on Monday as concerns about euro zone growth weighed on the single currency, while the greenback benefited from seasonal demand and uncertainty arising from the U.S.-China trade war.

FOREX-Euro drops to 28 month low on growth concerns

30 Sep 2019

* German inflation slowed in September * Seasonal demand boosts greenback * U.S.-China trade talks in focus (New throughout, updates trading and comments to U.S. market open, new byline, changes dateline, previous LONDON) By Karen Brettell NEW YORK, Sept 30 The euro fell to its lowest in two-and-a-half years against the U.S. dollar on Monday as concerns about euro zone growth weighed on the single currency, while the greenback benefited from seasonal demand and uncertainty arising from the U.S.-China trade war. German annual inflation unexpectedly slowed for the third consecutive month in September, data showed on Monday. “The German CPI print this morning was a little bit on the disappointing side,” said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto. Germany's leading economic institutes have also revised down their growth forecast for Europe's biggest economy for this year, two sources with knowledge of their decision told Reuters on Monday. The revisions, which feed into the government's own output projections, reflect growing concerns that a slowdown in Germany driven by a recession in the export-dependent manufacturing sector could hamper the broader euro zone economy. Demand for dollars heading into the last quarter of the year is also boosting the greenback. “In Q4 we tend to see strong seasonal demand for the U.S. dollar, and given the fact that euro/dollar is the most frequently traded pair in the foreign exchange market, that certainly means that we could be seeing some further downside in the euro going forward,” Rai said. The euro was last down 0.37% at $1.0898, after earlier falling to $1.0883, the lowest since May 2017. Investors are also focused on the U.S.-China trade war, which is being blamed for slowing global growth. President Donald Trump's administration is considering delisting Chinese companies from U.S. stock exchanges, three sources briefed on the matter said on Friday, in what would be a radical escalation of U.S.-China trade tensions. China warned on Monday of instability in international markets from any "decoupling" of China and the United States. Washington and China are preparing for another round of trade talks scheduled for Oct. 10 and 11. Uncertainty around the outcome of an impeachment inquiry into Trump may also provide safe-haven demand for the greenback. Trump on Monday escalated his attacks against the lawmaker leading the impeachment inquiry against him, suggesting that Representative Adam Schiff be arrested for "treason." New Zealand's dollar dropped as low as $0.6247, its weakest since 2015, after a survey showed business sentiment weakening to an 11-1/2 year low in September, strengthening the case for a reduction in interest rates. ======================================================== Currency bid prices at 9:42AM (1342 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.0898 $1.0938 -0.37% -4.98% +1.0947 +1.0886 Dollar/Yen JPY= 108.0200 107.9200 +0.09% -2.03% +108.0900 +107.7500 Euro/Yen EURJPY= 117.74 118.07 -0.28% -6.72% +118.1800 +117.5500 Dollar/Swiss CHF= 0.9967 0.9907 +0.61% +1.56% +0.9974 +0.9905 Sterling/Dollar GBP= 1.2307 1.2288 +0.15% -3.53% +1.2330 +1.2284 Dollar/Canadian CAD= 1.3248 1.3244 +0.03% -2.85% +1.3259 +1.3225 Australian/Doll AUD= 0.6757 0.6765 -0.12% -4.14% +0.6769 +0.6746 ar Euro/Swiss EURCHF= 1.0863 1.0842 +0.19% -3.47% +1.0873 +1.0836 Euro/Sterling EURGBP= 0.8853 0.8897 -0.49% -1.46% +0.8905 +0.8850 NZ NZD= 0.6268 0.6295 -0.43% -6.68% +0.6303 +0.6250 Dollar/Dollar Dollar/Norway NOK= 9.0822 9.0753 +0.08% +5.13% +9.0968 +9.0697 Euro/Norway EURNOK= 9.8991 9.9286 -0.30% -0.07% +9.9450 +9.8965 Dollar/Sweden SEK= 9.8188 9.7934 -0.11% +9.54% +9.8322 +9.7863 Euro/Sweden EURSEK= 10.7040 10.7156 -0.11% +4.29% +10.7333 +10.6950 (Editing by Nick Zieminski)

Euro rebounds from more than two-year low

27 Sep 2019

NEW YORK The euro fell to more than two-year lows against the U.S. dollar on Friday as a weak growth outlook weighed on the single currency, though it rebounded after testing technical support levels.

TREASURIES-Yield curve steeper after Trump threatens China delisting

27 Sep 2019

(Recasts; adds analyst quotes) By Karen Brettell and Kate Duguid NEW YORK, Sept 27 The Treasury yield curve steepened on Friday afternoon following reports that President Donald Trump's administration is considering delisting Chinese companies from U.S. stock exchanges, a source briefed on the matter said. The move would be a radical escalation of trade tensions between the two countries and part of a broader effort to limit U.S. investments into China, the source said, confirming an earlier report by Bloomberg that sent shockwaves through financial markets. As stocks plunged, yields on shorter duration notes fell, while those at the long end rose. Treasury bonds act as a safe-haven in times of market volatility, driving prices up and yields down. "What we've seen in the afternoon is in part a reaction to the broad risk tone following these headlines around potential U.S. limitations on portfolio flows to China. The steepening really began to accelerate amid those headlines," said Jonathan Cohn, interest rate strategist at Credit Suisse in New York. The two-year note yield was last 2.1 basis points lower to trade at 1.634%. The benchmark 10-year yield was up less than a basis point to 1.694%, leaving the spread between the two bonds - the most commonly used measure of the yield curve - at 5.6 basis points . Yields had fallen earlier in the day after the Commerce Department reported that U.S. consumer spending barely rose in August and business investment remained weak, suggesting the economy was losing momentum as trade tensions linger. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.1% last month as an increase in outlays on recreational goods and motor vehicles was offset by a decrease in spending at restaurants and hotels. In another report on Friday, the Commerce Department said orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.2% last month amid weak demand for electrical equipment, appliances and components, and computers and electronic products. "Some of the data was a little bit disappointing, for example, the consumer spending numbers and the durable orders numbers. Overall the data was OK, but a little bit lackluster and I think that's weighing on the tone a little bit," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. (Reporting by Karen Brettell and Kate Duguid; Editing by Dan Grebler and Nick Zieminski)

FOREX-Euro drops to two-year low before rebound

27 Sep 2019

* Weak eurozone growth outlook weighs on euro * Loose monetary policy also weighs on single currency (New throughout, updates trading and comments to U.S. market open, changes byline and dateline) By Karen Brettell NEW YORK, Sept 27 The euro fell to more than two-year lows against the U.S. dollar on Friday as a weak growth outlook weighed on the single currency, though it rebounded after testing technical support levels. Dismal business activity data from the euro area, especially powerhouse economy Germany, has pushed European bond yields lower across the board this week, with further pressure coming from concern over economic weakness in Britain. "We have had a steady drip of weak data from the eurozone this week and that is highlighting the differences between the U.S. and Europe," said Commerzbank analyst Thu Lan Nguyen, adding that the United States is still showing signs of strength. Negative interest rates, quantitative easing and other attempts by the European Central Bank (ECB) to stimulate the eurozone economy are also making investment in U.S. government debt more attractive and boosting the greenback against the euro. “The more recent drift lower in the euro seems to be perpetuated by the continued grind lower in growth expectations, and certainly in realized growth in the eurozone," said Mazen Issa, senior FX strategist at TD Securities in New York. Further ECB stimulus, negative rates and bond buying are also exerting a pull on the euro, he added. The euro dropped as low as $1.0903 -- its lowest since May 2017 -- in overnight trading before rising back to $1.0929. The single currency has technical support around $1.0925, which could provide a floor for the time being. “We did break below that briefly yesterday, but that was late trading in New York, and so I think there is going to be quite a bit of hesitance to try to push it below that on a sustainable basis,” Issa said, noting that quarter-end rebalancing is also limiting risk taking. Sterling was the other big loser after Bank of England policymaker Michael Saunders hinted at looser monetary policy if Brexit uncertainty remained prolonged against a backdrop of disappointing global growth. The pound weakened to a two-week low of $1.2269 on Friday as his comments raised expectations that the next move from the central bank could be a rate cut. The currency later rose back to $1.2318. ======================================================== Currency bid prices at 9:56AM (1356 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.0929 $1.0921 +0.07% -4.70% +1.0948 +1.0906 Dollar/Yen JPY= 108.0600 107.8200 +0.22% -2.00% +108.1600 +107.6700 Euro/Yen EURJPY= 118.13 117.74 +0.33% -6.41% +118.2900 +117.4700 Dollar/Swiss CHF= 0.9929 0.9935 -0.06% +1.17% +0.9948 +0.9915 Sterling/Dollar GBP= 1.2318 1.2322 -0.03% -3.44% +1.2336 +1.2272 Dollar/Canadian CAD= 1.3246 1.3268 -0.17% -2.86% +1.3278 +1.3245 Australian/Doll AUD= 0.6766 0.6748 +0.27% -4.01% +0.6768 +0.6744 ar Euro/Swiss EURCHF= 1.0851 1.0850 +0.01% -3.58% +1.0863 +1.0840 Euro/Sterling EURGBP= 0.8870 0.8861 +0.10% -1.27% +0.8896 +0.8847 NZ NZD= 0.6303 0.6297 +0.10% -6.16% +0.6304 +0.6280 Dollar/Dollar Dollar/Norway NOK= 9.0848 9.0797 +0.06% +5.16% +9.1007 +9.0657 Euro/Norway EURNOK= 9.9325 9.9178 +0.15% +0.27% +9.9412 +9.9102 Dollar/Sweden SEK= 9.8141 9.7635 +0.59% +9.49% +9.8155 +9.7531 Euro/Sweden EURSEK= 10.7271 10.6642 +0.59% +4.52% +10.7296 +10.6524 (Additional reporting by Saikat Chatterjee in London Editing by David Goodman)

TREASURIES-Bonds pare price losses as data disappoints

27 Sep 2019

* Consumer spending barely rises, durable goods orders fall * Investors focused on impeachment probe, trade talks By Karen Brettell NEW YORK, Sept 27 U.S. Treasury prices gave back most of their early losses on Friday after U.S. data was weaker than expected and as month- and quarter-end rebalancing increased demand for safe-haven U.S. debt. U.S. consumer spending barely rose in August and business investment remained weak, suggesting the economy was losing momentum as trade tensions linger. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.1% last month as an increase in outlays on recreational goods and motor vehicles was offset by a decrease in spending at restaurants and hotels. In another report on Friday, the Commerce Department said orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.2% last month amid weak demand for electrical equipment, appliances and components, and computers and electronic products. “Some of the data was a little bit disappointing, for example, the consumer spending numbers and the durable orders numbers. Overall the data was OK, but a little bit lackluster and I think that’s weighing on the tone a little bit,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. Benchmark 10-year notes were last down 3/32 in price to yield 1.694%, after earlier rising to 1.725%. Investors are also focused on the impeachment probe of U.S. President Donald Trump and the latest headlines from the trade dispute between the United States and China. A whistleblower report released on Thursday said Trump not only abused his office in attempting to solicit Ukraine's interference in the 2020 U.S. election, but that the White House tried to "lock down" evidence about it. China's top diplomat said on Thursday that China was willing to buy more U.S. products and that trade talks would yield results. Those comments fueled the positive mood after Trump on Wednesday praised the Chinese purchases, saying a trade deal could come sooner than people thought. Washington and China are preparing for another round of trade talks scheduled for Oct. 10 and 11. (Reporting by Karen Brettell; Editing by Dan Grebler) )

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