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Karen Pierog

Pandemic curbs bonds and tax measures on U.S. ballots

23 Oct 2020

CHICAGO, Oct 23 U.S. states and local governments, wary of assuming new debt even as the COVID-19 pandemic blows holes in their budgets, have a far lower total dollar amount of bonds riding on the Nov. 3 general election than they did four years ago.

Illinois to sell $850 million of bonds as investors brace for junk status

19 Oct 2020

CHICAGO Illinois is scheduled to sell $850 million of bonds on Tuesday as investors demand fatter yields for the state's debt due to increased worries over its deep financial woes, which were exacerbated by the coronavirus pandemic.

CORRECTED-TREASURIES-Yields edge up as safe-haven buying sputters

15 Oct 2020

(Corrects 10-year Treasury yield in paragraph 2) By Karen Pierog CHICAGO, Oct 15 U.S. Treasury yields edged higher on Thursday, changing direction after an earlier safe-haven rally sparked when jobless claims notched an unexpected climb. The benchmark 10-year yield was last 0.7306%. Guy LeBas, chief fixed income strategist at Janney Capital Management in Philadelphia, said the session's earlier risk-on tone switched to risk off as Wall Street pared losses. "You see it in the pretty substantial reversal after a big morning rally in Treasuries," he said. Yields on the longer end of the curve dropped to session lows after the U.S. Labor Department reported initial claims for state unemployment benefits totaled a seasonally adjusted 898,000 for the week ended Oct. 10, compared to 845,000 in the prior week. Economists polled by Reuters had forecast 825,000 applications in the latest week. Tony Rodriguez, head of fixed income strategy at Nuveen, said the global rise in virus cases and a lack of more fiscal aid for the U.S. economy were center stage in the market. "Both of those being obviously negative for near-term growth," he said. On the stimulus front, President Donald Trump said on he was willing to raise his offer of $1.8 trillion to win support of Congressional Democrats. Trump's fellow Republican, Senate Majority Leader Mitch McConnell, said an aid package would be passed eventually, but the president's latest offer would be a tough sell to his members. The coming week will bring more supply to the market, with $22 billion of 20-year bonds set for auction on Oct. 21 and $17 billion of Treasury Inflation-Protected Securities (TIPS) selling on Oct. 22. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was at 0.1370%, vs 0.1390% late Wednesday. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was last at 57.2 basis points, down from Wednesday's close. October 15 Thursday 3:33PM New York / 1933 GMT Price US T BONDS DEC0 175-2/32 -0-10/32 10YR TNotes DEC0 139-24/256 -0-32/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.1025 0.104 -0.002 Six-month bills 0.1175 0.1192 0.002 Two-year note 99-248/256 0.141 0.002 Three-year note 99-214/256 0.1799 0.005 Five-year note 99-174/256 0.3152 0.013 Seven-year note 99-2/256 0.5204 0.016 10-year note 98-240/256 0.7372 0.015 20-year bond 97-32/256 1.2897 0.017 30-year bond 96-148/256 1.518 0.019 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.00 0.00 spread U.S. 3-year dollar swap 8.50 0.00 spread U.S. 5-year dollar swap 8.00 0.50 spread U.S. 10-year dollar swap 3.50 0.25 spread U.S. 30-year dollar swap -34.25 -0.50 spread (Reporting by Karen Pierog; Editing by Bernadette Baum and David Gregorio)

TREASURIES-Yields trend lower with boost in safe-haven demand

15 Oct 2020

By Karen Pierog CHICAGO, Oct 15 U.S. Treasury yields edged lower on Thursday as investors fled risk amid rising coronavirus cases, an unexpected jump in new jobless claims, and uncertainty over another round of fiscal stimulus to boost the economy. The benchmark 10-year yield was last down less than a basis point at 0.7157%. Tony Rodriguez, head of fixed income strategy at Nuveen, said the global rise in virus cases and a lack of more fiscal aid for the U.S. economy were center stage in the market. "Both of those being obviously negative for near-term growth," he said, adding that a sell-off in risk markets sparked Treasury buying, pushing yields lower. U.S. Treasury Secretary Steve Mnuchin said on Thursday that he will keep working on reaching a stimulus deal with Democratic House Speaker Nancy Pelosi before the Nov. 3 election. But Rodriguez said Republican senators remain an impediment to getting a deal done. Senate Majority Leader Mitch McConnell has said his chamber would vote on a slimmed-down $500 billion COVID-19 bill next week. Adding to economic worries was Thursday's U.S. Labor Department report on initial claims for state unemployment benefits, which totaled a seasonally adjusted 898,000 for the week ended Oct. 10, compared to 845,000 in the prior week. Economists polled by Reuters had forecast 825,000 applications in the latest week. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was last down less than a basis point at 0.137%. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was last at 57.50 basis points, 1 basis point lower from Wednesday's close. October 15 Thursday 9:52AM New York / 1452 GMT Price Current Net Yield % Change (bps) Three-month bills 0.1 0.1014 -0.005 Six-month bills 0.11 0.1116 -0.005 Two-year note 99-250/256 0.137 -0.002 Three-year note 99-220/256 0.1721 -0.003 Five-year note 99-192/256 0.3009 -0.001 Seven-year note 99-36/256 0.5009 -0.003 10-year note 99-36/256 0.7157 -0.006 20-year bond 97-164/256 1.2598 -0.013 30-year bond 97-80/256 1.4868 -0.012 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.75 -0.25 spread U.S. 3-year dollar swap 8.50 0.00 spread U.S. 5-year dollar swap 8.00 0.50 spread U.S. 10-year dollar swap 3.50 0.25 spread U.S. 30-year dollar swap -33.50 0.25 spread (Reporting by Karen Pierog; Editing by Bernadette Baum)

TREASURIES-Yields dip as hopes dim for pre-election stimulus deal

14 Oct 2020

(Recasts, updates yields, adds Mnuchin remarks and analyst comments) By Karen Pierog CHICAGO, Oct 14 U.S. Treasury yields drifted mostly lower on Wednesday as Treasury Secretary Steve Mnuchin said a deal to combat the economic fallout from the coronavirus pandemic appeared unlikely before the Nov. 3 presidential election. The benchmark 10-year yield was last down less than a basis point at 0.7223%. Speaking at the Milken Institute Global Conference, Mnuchin said he and Democratic House Speaker Nancy Pelosi were still "far apart" on some issues and that getting a stimulus deal done before the election would be difficult. Ben Jeffery, a strategist at BMO Capital Markets in New York, said Mnuchin's remarks sent yields lower. "That was the main event today," he said, adding that yields so far this week were stuck in a range. Tom Simons, a money market economist at Jefferies in New York, said aside from virus vaccine news, "stimulus is probably the most important news item that the market is trading on." "But at this point, it's hard to expect that anything is going to get done this year on that," he said. Meanwhile, a bigger-than-expected increase in U.S. producer prices in September did not rattle the market. The Labor Department reported the producer price index (PPI) for final demand rose 0.4% last month after advancing 0.3% in August and was up 0.4% in the 12 months through September. Economists polled by Reuters had forecast the PPI gaining 0.2% in September and rebounding 0.2% on a year-on-year basis. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was last down less than a basis point at 0.139%. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was last at 58 basis points, less than a basis point lower from Tuesday's close. October 14 Wednesday 2:53PM New York / 1953 GMT Price Current Net Yield % Change (bps) Three-month bills 0.105 0.1065 0.001 Six-month bills 0.115 0.1167 0.000 Two-year note 99-249/256 0.139 -0.002 Three-year note 99-218/256 0.1746 -0.002 Five-year note 99-190/256 0.3024 0.000 Seven-year note 99-32/256 0.5031 -0.002 10-year note 99-20/256 0.7223 -0.005 20-year bond 97-108/256 1.2725 -0.010 30-year bond 97-4/256 1.4994 -0.015 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.00 0.25 spread U.S. 3-year dollar swap 8.50 0.25 spread U.S. 5-year dollar swap 7.50 0.00 spread U.S. 10-year dollar swap 3.25 0.00 spread U.S. 30-year dollar swap -34.00 -0.50 spread (Reporting by Karen Pierog Editing by Chizu Nomiyama)

TREASURIES-Longer-term yields dip with focus on stimulus

14 Oct 2020

By Karen Pierog CHICAGO, Oct 14 Yields on longer-term U.S. Treasuries drifted a touch lower on Wednesday as the market awaited developments from Washington on measures to combat the economic fallout from the coronavirus pandemic. The benchmark 10-year yield was last down less than a basis point at 0.7239%. "Aside from potentially seeing headlines about vaccines and that sort of thing, stimulus is probably the most important news item that the market is trading on," said Tom Simons, a money market economist at Jefferies in New York. "But at this point, it's hard to expect that anything is going to get done this year on that." On Tuesday, the sides appeared to be far apart with Senate Majority Leader Mitch McConnell announcing a vote next week by his Republican-controlled chamber on $500 billion of targeted aid and Democratic House Speaker Nancy Pelosi advocating much greater spending. Simons said given the political impasse over stimulus, the market will be monitoring speeches by U.S. Federal Reserve officials on Wednesday for specific comments on policy initiatives. "We've had some Fed speak here but it's mostly the same as we've seen the last couple of weeks," he said. A bigger-than-expected increase in U.S. producer prices in September did not rattle the market. The Labor Department reported the producer price index (PPI) for final demand rose 0.4% last month after advancing 0.3% in August and was up 0.4% in the 12 months through September. Economists polled by Reuters had forecast the PPI gaining 0.2% in September and rebounding 0.2% on a year-on-year basis. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was last up less than a basis point at 0.143%. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was last at 57.90 basis points, less than a basis point lower from Tuesday's close. October 14 Wednesday 9:50 AM New York / 1450 GMT Price Current Net Yield % Change (bps) Three-month bills 0.105 0.1065 0.001 Six-month bills 0.115 0.1167 0.000 Two-year note 99-247/256 0.143 0.002 Three-year note 99-214/256 0.1799 0.003 Five-year note 99-186/256 0.3056 0.004 Seven-year note 99-28/256 0.5054 0.000 10-year note 99-16/256 0.7239 -0.003 20-year bond 97-100/256 1.2743 -0.009 30-year bond 96-236/256 1.5034 -0.011 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.00 0.25 spread U.S. 3-year dollar swap 8.50 0.25 spread U.S. 5-year dollar swap 7.50 0.00 spread U.S. 10-year dollar swap 3.25 0.00 spread U.S. 30-year dollar swap -33.50 0.00 spread (Reporting by Karen Pierog)

TREASURIES-Yields tumble amid mixed signals on stimulus

13 Oct 2020

(Recasts, updates yields, adds analyst comments) By Karen Pierog CHICAGO, Oct 13 U.S. Treasury yields moved lower on Tuesday as disparate views in Washington over the next move on coronavirus aid contributed to a risk-off tone in markets. The benchmark 10-year yield was last down 4.4 basis points at 0.7305%. "On stimulus, there's still a divide," said Eric Souza, senior portfolio manager at SVB Asset Management in San Francisco, adding that the discord eased concerns over growing supply of Treasury debt. A new funding package to combat the economic fallout from the pandemic remained up in the air on Tuesday as U.S. Senate Majority Leader Mitch McConnell said his chamber would vote on $500 billion of targeted funding next week, while President Donald Trump tweeted "Go big or go home!!!" Earlier on Tuesday, U.S. House Speaker Nancy Pelosi said the White House's latest $1.8 trillion offer falls "significantly short" of what is needed. Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research in New York, said while nothing is expected ahead of the Nov. 3 election, a deal is likely afterwards regardless of the election outcome and that could lift yields. "I think the path of least resistance is probably higher (yields) in Treasuries but it's a slow move because we still don't have signs of inflation or excessively strong growth," she said. Souza also noted that the risk aversion that sent Wall Street lower followed Johnson & Johnson's announcement it was pausing clinical trials of a COVID-19 vaccine candidate due to an unexplained illness in a study participant. Risk appetite has seesawed as investors weigh a rise in the number of U.S. coronavirus cases, deaths, hospitalizations, and rates of positive test results against promising vaccine developments. On the economic data front, the U.S. Labor Department reported consumer prices rose for a fourth straight month in September, but at a slower pace amid considerable slack in the economy.. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes was last at 58.50 basis points, 3.30 basis points lower than at Friday's close. The figure is viewed as an indicator of economic expectations, October 13 Tuesday 3:14PM New York / 2014 GMT Price Price Current Net Yield % Change (bps) Three-month bills 0.095 0.0963 -0.005 Six-month bills 0.115 0.1167 0.000 Two-year note 99-248/256 0.1409 -0.012 Three-year note 99-214/256 0.1799 -0.018 Five-year note 99-186/256 0.3056 -0.030 Seven-year note 99-24/256 0.5076 -0.041 10-year note 99 0.7305 -0.044 20-year bond 97-52/256 1.2852 -0.051 30-year bond 96-156/256 1.5167 -0.057 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.75 0.25 spread U.S. 3-year dollar swap 8.00 0.25 spread U.S. 5-year dollar swap 7.50 0.00 spread U.S. 10-year dollar swap 3.25 0.25 spread U.S. 30-year dollar swap -33.50 1.25 spread (Reporting by Karen Pierog; Editing by Andrea Ricci; Editing by David Gregorio)

TREASURIES-Yields tumble on data, rising coronavirus cases

13 Oct 2020

By Karen Pierog CHICAGO, Oct 13 U.S. Treasury yields moved lower on Tuesday driven by soft economic data and a rise in COVID-19 cases globally that raised concerns of potential weakness ahead. The benchmark 10-year yield was last down 4.3 basis points at 0.7322%. Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research in New York, pointed to "a lot of soft data coming out of Europe," as well as the latest U.S. consumer price data for the downward move as the market returned from Monday's Columbus Day holiday. Yields extended their fall after a U.S. Labor Department report showed consumer prices rose for a fourth straight month in September but at a slower pace amid considerable slack in the economy. Jones said more COVID-19 outbreaks in the United States and other countries were seen as constraining economic activity. Meanwhile, the market was watching Washington for signs of a new stimulus package to combat the economic fallout from the pandemic. Jones said while nothing is expected ahead of the Nov. 3 election, a deal is likely afterwards regardless of the election outcome and that could lift yields. "I think the path of least resistance is probably higher (yields) in Treasuries but it's a slow move because we still don't have signs of inflation or excessively strong growth," she said. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was last down 1 basis point at 0.143%. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was last at 58.80 basis points, 3 basis points lower than at Friday's close. October 13 Tuesday 9:52AM New York / 1452 GMT Price Price Current Net Yield % Change (bps) Three-month bills 0.1 0.1014 0.000 Six-month bills 0.115 0.1167 0.000 Two-year note 99-247/256 0.143 -0.010 Three-year note 99-212/256 0.1825 -0.015 Five-year note 99-186/256 0.3056 -0.030 Seven-year note 99-20/256 0.51 -0.039 10-year note 98-252/256 0.7322 -0.043 20-year bond 97-48/256 1.2861 -0.050 30-year bond 96-120/256 1.5227 -0.051 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.75 0.25 spread U.S. 3-year dollar swap 7.75 0.00 spread U.S. 5-year dollar swap 7.25 -0.25 spread U.S. 10-year dollar swap 3.00 0.00 spread U.S. 30-year dollar swap -34.25 0.50 spread (Reporiting by Karen Pierog; Editing by Andrea Ricci)

U.S. states, cities in waiting game as talks on federal aid halted

07 Oct 2020

CHICAGO U.S. state and city leaders are grappling with whether to delay tough budget decisions in the wake of President Donald Trump's shutdown of negotiations on a comprehensive stimulus package ahead of the Nov. 3 election.

U.S. states, cities in waiting game as talks on federal aid halted

07 Oct 2020

CHICAGO, Oct 7 U.S. state and city leaders are grappling with whether to delay tough budget decisions in the wake of President Donald Trump's shutdown of negotiations on a comprehensive stimulus package ahead of the Nov. 3 election.

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