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Noel Randewich

Nvidia eclipses Intel as most valuable U.S. chipmaker

08 Jul 2020

Nvidia has overtaken Intel for the first time as the most valuable U.S. chipmaker.

TREASURIES-Record low yield in 10-year auction shows strong demand

08 Jul 2020

(Updates with trading activity, 10-year note auction results) By Ross Kerber and Noel Randewich July 8 The U.S. sold $29 billion worth of 10-year notes for the lowest high yield on record on Wednesday, indicating strong demand for the safe-haven securities despite a flood of new issuance to fund economic stimulus in response to the coronavirus pandemic. The high yield was 0.653% in the auction of the benchmark notes, the U.S. Treasury Department said. That compared to the previous high yield of 0.7% in May, and continuing a trend from Tuesday when 3-year notes also sold for the lowest high yield ever. Bids accepted from non-dealers accounted for 80.3% of the sale, compared with an average of 71.5%, according to a note from BMO Capital Markets. Following the auction, Treasury yields were stable for the session, with the 10-year yield was down less than a basis point at 0.6463%. Analysts said the auction showed investors were willing to look past rising U.S. deficits and the ongoing pandemic, perhaps because the securities still return more than the debt of other governments. "It was definitely an auction that was well received by primary market participants," said BMO Capital Markets rates strategist Ben Jeffery. “As the world’s preferred save haven assets, the structural demand for Treasuries is always going to be a natural outlet for those looking for safety, and even more with low or negative interest rates in Europe," he said. Wall Street edged higher in choppy trading, supported by technology shares as early signs of an economic rebound overrode fears of another lockdown due to a jump in coronavirus cases across the country. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 49 basis points, about a basis point higher than at its close on Tuesday and near its level since mid-June. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down less than a basis point at 0.1567% in afternoon trading. July 8 Wednesday 1:32PM New York / 1732 GMT Price Current Net Yield % Change (bps) Three-month bills 0.145 0.1475 0.000 Two-year note 99-240/256 0.1567 -0.008 Three-year note 99-212/256 0.1825 -0.008 Five-year note 99-206/256 0.2896 -0.003 Seven-year note 100-24/256 0.4863 0.000 10-year note 99-204/256 0.6463 -0.002 20-year bond 99-144/256 1.1497 -0.007 30-year bond 96-188/256 1.3839 -0.005 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 5.75 0.50 spread U.S. 3-year dollar swap 3.75 0.00 spread U.S. 5-year dollar swap 2.50 0.00 spread U.S. 10-year dollar swap -3.25 -0.25 spread (Reporting by Ross Kerber in Boston and by Noel Randewich in San Francisco. Editing by Nick Zieminski and Bernadette Baum)

Tesla's Musk approaches a $1.8 billion bonanza

08 Jul 2020

Tesla Inc's blistering stock rally is putting Chief Executive Elon Musk in reach of a payday potentially worth $1.8 billion, his second jackpot from the electric car maker in about two months.

TREASURIES-Yields drop as coronavirus worries return

07 Jul 2020

(Adds detail on prices, auction, comment from investors, previous BOSTON) By Noel Randewich and Ross Kerber July 7 U.S. Treasury yields fell on Tuesday as a worsening COVID-19 caseload aggravated concerns about reopening businesses too quickly. The benchmark 10-year yield was down 3.3 basis points in afternoon trading at 0.6512%. Wall Street's main indexes dipped a day after the benchmark S&P 500 logged its longest streak of gains this year. Treasury yields had risen on Monday, but Tuesday's trading showed investors remain concerned about the U.S. economic outlook. "It's today's downturn in the Dow and S&P 500 that is giving Treasuries a bit of a safe-haven bid," said Kim Rupert, senior economist at Action Economics in San Francisco. "It's mostly a COVID bid." On Monday, Florida's greater Miami area became the latest coronavirus hot spot to roll back its reopening, ordering restaurant dining closed, as COVID-19 cases surged nationwide and the U.S. death toll topped 130,000. Oil prices also fell on Tuesday on concerns a surge in new virus cases will hamper a recovery in fuel demand. The yield on three-year notes was down less than a basis point at 0.1886% after the U.S. government auctioned $46 billion of them, part of a drastically increased series of debt auctions to fund trillions of dollars in stimulus aimed at protecting the economy from the pandemic." Non-dealers accounting for 67.6% of bids accepted in the auction, higher than the average of 62.8% in other auctions and indicating good demand, said BMO Capital Markets strategist Ben Jeffery in a note to clients. He added the high yield of 0.19% was the lowest at which three-year notes have been issued, reflecting how yields on all Treasuries are far below where they stood at the start of 2020. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 49 basis points, about 3 basis points lower than Monday's close and in line with its level since mid-June. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up less than a basis point at 0.1626%. July 7 Tuesday 2:08 pm New York / 1808 GMT Price Yield Yield Change Three-month bills 0.145 0.1475 -0.008 Six-month bills 0.1625 0.1649 -0.002 Two-year note 99-237/256 0.1626 0.002 Three-year note 100-46/256 0.1886 -0.002 Five-year note 99-200/256 0.2943 -0.013 Seven-year note 100-20/256 0.4886 -0.022 10-year note 99-192/256 0.6512 -0.033 20-year bond 99-96/256 1.1603 -0.047 30-year bond 96-116/256 1.3957 -0.046 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap spread 5.50 -0.75 U.S. 3-year dollar swap spread 3.75 -0.50 U.S. 5-year dollar swap spread 2.50 -0.25 U.S. 10-year dollar swap spread -3.00 0.00 U.S. 30-year dollar swap spread -49.50 0.25 (Reporting by Ross Kerber in Boston; Editing by Bernadette Baum and Alistair Bell)

Tesla shares surge 13% as strong deliveries drive profit optimism

06 Jul 2020

Shares of Tesla Inc surged 13% to a record high on Monday, extending their rally to over 40% in five sessions after analysts raised their price targets on the electric car maker following its strong quarterly deliveries.

TREASURIES-Yields edge up as traders eye economic recovery, auctions

06 Jul 2020

(Updates with market activity, chart, previous BOSTON) By Noel Randewich and Ross Kerber July 6 U.S. Treasury yields edged higher on Monday as investors focused on an eventual economic rebound from the coronavirus, and as traders priced in auctions this week that will increase the supply of the low-risk debt. The benchmark 10-year yield was up 2.5 basis points in afternoon trading at 0.6956%. Treasury auctions, including one for $29 billion of 10-year notes set for Wednesday, will increase the supply of the securities and put pressure on their prices. In addition, Wall Street and global stock markets jumped as investors focused on the prospects of a swift recovery from the COVID-19 pandemic. Last Thursday, ahead of the U.S. holiday weekend, the Labor Department reported that nonfarm payrolls increased in June by the most since the government started keeping records in 1939. "You’ve got the auctions coming up, so there is probably some positioning ahead of those, and you have seen a substantial rally in equity markets," said Eric Jussaume, director of fixed income for Cambridge Trust. "People are getting caught up to the better than expected economic numbers we had last week." Investors also bet on China leading the revival from a pandemic-driven downturn, looking past a surge in new cases of COVID-19 at home. During the U.S. Independence Day weekend, several states reported a record increase in new infections, with Florida surpassing the highest daily tally reported by any European country during the peak of the outbreak. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 54 basis points. That was about two basis points higher than Friday's close and roughly in line with its level since June 15. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up less than a basis point at 0.1606% in afternoon trading. July 6 Monday 1:41 pm New York / 1741 GMT Price Current Net Yield % Change (bps) Three-month bills 0.1425 0.1445 0.002 Six-month bills 0.165 0.1679 0.006 Two-year note 99-238/256 0.1606 0.006 Three-year note 100-44/256 0.1913 0.010 Five-year note 99-176/256 0.3133 0.016 Seven-year note 99-220/256 0.5205 0.021 10-year note 99-84/256 0.6956 0.025 20-year bond 98-64/256 1.2245 0.030 30-year bond 94-228/256 1.4618 0.029 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 6.50 -0.50 spread U.S. 3-year dollar swap 4.50 -0.25 spread U.S. 5-year dollar swap 2.75 -0.50 spread U.S. 10-year dollar swap -3.00 -0.50 spread U.S. 30-year dollar swap -49.75 0.00 spread (Reporting by Noel Randewich in Oakland, Calif., and by Ross Kerber in Boston; Editing by Andrea Ricci and Chizu Nomiyama)

RPT-St Week Ahead-Clouds may be parting for dividend investors

05 Jul 2020

By Noel Randewich July 2 U.S. companies are cutting their dividends less than investors anticipated, providing a potential boost to a stock market rally that has clashed with concerns over a recent surge in coronavirus infections. S&P 500 companies are likely to see an aggregate 2% decline in 2020 dividend payments, compared with analyst projections earlier this year of around 10%, according to S&P Dow Jones. That's good news for income-seeking investors at a time when a series of rapid interest rate cuts by the Federal Reserve has taken U.S. Treasury yields to near zero, sending market participants further afield in search of steady payouts. "We saw a devastating amount of dividend cuts, but the second half of the year does look a bit better," S&P Dow Jones analyst Howard Silverblatt said. U.S. financial markets are closed on Friday for the July 4th holiday. On Monday, data firm IHS Markit reports its surveys of U.S. business activity, while Walgreens Boots Alliance Inc reports quarterly results on Thursday and U.S. initial jobless claims are also due out that day. S&P 500 companies slashed or suspended over $40 billion in dividends in the second quarter, the deepest quarterly drop since 2009, according to S&P Dow Jones. The cuts tapered off in the latter part of the quarter as the U.S. economy began to rebound, fueled by Fed stimulus and easing lockdowns across the nation. "The hope is that we have turned a corner, but that is going to depend on the reopening of the economy," Silverblatt said. The fall in Treasury yields to historic lows has raised the allure of stock dividends, which are generally paid four times a year. The gap between the S&P 500 dividend yield and the 10-year Treasury yield in March hit a high not seen since at least the 1970s, according to Datastream data, which does not go back further. Currently, the S&P 500's dividend is nearly 2%, compared with the benchmark 10-year U.S. Treasury's 0.67% yield. Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Oklahoma, has been buying shares of dividend-paying companies that have also been outperforming in the epidemic, including Johnson & Johnson, Campbell Soup, General Mills, and retailers Costco Wholesale Corp and Walmart. Johnson & Johnson, which is among companies rushing to develop a coronavirus vaccine, raised its dividend in April. In June, Kroger and Target, which have been seeing more business with people staying at home, upped their dividends. "I have plenty of older clients who only want dividend stocks," Dollarhide said. "There are plenty of COVID-19 dividend plays," he added. With California, Texas and many other states reporting record increases in new cases of COVID-19, the pandemic's trajectory remains the main source of uncertainty of whether more companies will suspend or cut their dividends. Over 40% of the United States has now reversed or placed reopenings on hold, analysts at Goldman Sachs said in a recent note. Adding to uncertainty about future dividends, the Fed last week capped big-bank dividend payments and barred share repurchases until at least the fourth quarter after finding lenders faced significant capital losses when tested against an economic slump caused by the coronavirus pandemic. Wells Fargo shares have fallen about 1% since late Monday after the bank warned it would reduce its dividend as a result of the Fed's annual bank stress tests. Still, only three S&P 500 companies decreased or suspended their dividend payments in June, while six companies upped their dividends, according to S&P Dow Jones. Notable dividend increases in the second quarter: Company Date Dividend Increase Kroger 25-Jun +12% Target 11-Jun +3% UnitedHealth 3-Jun +16% Group Clorox 21-May +5% Cardinal Health 11-May +7% PepsiCo 5-May +7% Apple 30-Apr +6% Johnson & Johnson 14-Apr +6% Procter & Gamble 14-Apr +6% (Reporting by Noel Randewich; Editing by Ira Iosebashvili; Editing by Leslie Adler)

Wall Street Week Ahead: Clouds may be parting for dividend investors

02 Jul 2020

U.S. companies are cutting their dividends less than investors anticipated, providing a potential boost to a stock market rally that has clashed with concerns over a recent surge in coronavirus infections.

Wall Street faces danger signs after best quarter since '98

30 Jun 2020

A stock rebound marked by Wall Street's strongest quarter in more than two decades has slowed in recent weeks, as a resurgence in coronavirus cases threatens to derail the economy's recovery from a deep downturn.

Dollar strengthens as virus fears dent risk appetite

25 Jun 2020

The U.S. dollar gained on Thursday due to safety buying as fears grew over a rapid rise in coronavirus infections in some U.S. states, and as trade tensions worsened between the United States and the European Union.

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