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Richard Leong

TREASURIES-U.S. yield curve steepens on bets for rate-hike pause

07 Dec 2018

* Weaker-than-expected jobs data boost view on slower U.S. growth * Angst over U.S.-China trade tension feed safety bids for bonds * Rates futures imply traders see one U.S. rate hike in 2019 * U.S. 10-year yield on track to fall for five straight weeks (Updates market action, adds quote) By Richard Leong NEW YORK, Dec 7 The margin between short- and long-end U.S. Treasury yields grew on Friday as weaker-than-expected data on domestic jobs growth in November bolstered the view that the Federal Reserve may tap the brakes on raising interest rates sooner than previously thought. Bets that the end of the U.S. central bank's rate-hike campaign is on the horizon and a rally in oil prices after an OPEC deal to reduce output briefly reduced demand for safe-haven U.S. government debt, analysts said. "The market is really fading the idea that the Fed can keep raising rates without slowing the economy," said Robert Tipp, chief investment strategist at PGIM Fixed Income in Newark, New Jersey. Bond yields have fallen over the past month on worries about slowing global growth and declining oil prices. Fears about the Brexit negotiations and trade tension between China and the United States had stoked safety bids for Treasuries. Unease about trade relations between Washington and Beijing grew on comments from White House trade adviser Peter Navarro following the arrest of a top executive oat Huawei Technologies. Earlier Friday, the U.S. Labor Department said public and private employers hired 155,000 workers in November, fewer than the 200,000 forecast by economists polled by Reuters, while the jobless rate held at a 49-year low of 3.7 percent. Wage growth remained modest, rising 0.2 percent last month. The benchmark 10-year Treasury yield was down 2 basis points at 2.852 percent, wiping out an earlier 5-basis-point increase. On Thursday, it touched 2.826 percent, a three-month low. The 10-year yield was on track to post its steepest drop since October 2015, Refinitiv data showed. The two-year yield fell 4 basis points to 2.715 percent. The entire yield curve steepened, with the spread between two-year and 10-year yields widening 2 basis points to 14 basis points. The front half of the yield curve remained inverted after two-year and three-year yields rose above five-year yields for the first time in over a decade earlier this week. This market phenomenon has stoked speculation on whether a U.S. recession is looming. Interest rates futures suggested traders saw a 75 percent chance the Fed would raise rates by a quarter point to 2.25-2.50 percent at its Dec. 18-19 meeting, up from 71 percent on Thursday, CME Group's FedWatch showed. Futures prices implied traders expected little chance of more than one rate hike in 2019. Back in September, Fed policymakers on average had projected three rate increases for next year. December 7 Friday 3:24PM New York / 2024 GMT Price US T BONDS MAR9 143-12/32 6/32 10YR TNotes MAR9 120-176/256 9/32 Price Current Net Yield % Change (bps) Three-month bills 2.3475 2.3937 -0.016 Six-month bills 2.47 2.5353 -0.016 Two-year note 100-17/256 2.7149 -0.043 Three-year note 100-110/256 2.7211 -0.045 Five-year note 100-210/256 2.6975 -0.050 Seven-year note 100-176/256 2.7658 -0.037 10-year note 102-92/256 2.8504 -0.026 30-year bond 104-132/256 3.1411 0.005 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 13.40 0.15 30-year vs 5-year yield 44.10 3.30 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 15.50 -1.00 spread U.S. 3-year dollar swap 11.50 -2.25 spread U.S. 5-year dollar swap 11.75 -1.50 spread U.S. 10-year dollar swap 5.00 -1.75 spread U.S. 30-year dollar swap -14.75 -2.75 spread (Reporting by Richard Leong Editing by Chizu Nomiyama, Dan Grebler and Jonathan Oatis)

TREASURIES-U.S. yield curve steepens on hopes for rate-hike pause

07 Dec 2018

* Weaker-than-expected jobs data boost view on slower U.S. growth * Rates futures imply traders see one U.S. rate hike in 2019 * U.S. 10-year yield on track to fall for five straight weeks (Updates market action, adds quote, table) By Richard Leong NEW YORK, Dec 7 The margin between short- and long-end U.S. Treasury yields grew on Friday as weaker-than-expected data on domestic jobs growth in November bolstered the view the Federal Reserve may tap the brakes on raising interest rates sooner than previously thought. Bets that the end of the U.S. central bank's rate-hike campaign is on the horizon and a rally in oil prices after an OPEC deal to reduce output briefly kindled appetite for stocks and other risky assets, reducing demand for safe-haven U.S. government debt, analysts said. Bond yields have fallen over the past month on worries about slowing global growth and declining oil prices. Fears about the Brexit negotiation and trade tension between China and the United States had stoked safety bids for Treasuries. "It builds the case for a deceleration for hiking next year," Ed Al-Hussainy, global rates and currency strategist at Columbia Threadneedle Investments in Minneapolis, said of the latest payrolls report. Earlier Friday, the U.S. Labor Department said public and private employers hired 155,000 workers in November, fewer than the 200,000 forecast by economists polled by Reuters, while the jobless rate held at a 49-year low of 3.7 percent. Wage growth remained modest, raising 0.2 percent last month. At 10:32 a.m. (1532 GMT), the benchmark 10-year Treasury yield was up 2 basis points at 2.895 percent. On Thursday, it touched 2.866 percent, a three-month low. The 10-year yield was on track to fall for a fifth straight week, which would be the longest such stretch since seven weeks of decline between May and July 2016, Refinitiv data showed. The two-year yield was down marginally at 2.754 percent, leaving its weekly fall at 5 basis points. The entire yield curve steepened, with the spread between two-year and 10-year yields widening 2 basis points to 14 basis points. The front half of the yield curve remained inverted after two-year and three-year yields rose above five-year yields for the first time in over a decade earlier this week. This market phenomenon has stoked speculation as to whether a U.S. recession is looming. Interest rates futures suggested traders saw a 78 percent chance the Fed would raise rates by a quarter point to 2.25-2.50 percent at its Dec. 18-19 meeting, up from 71 percent on Thursday, CME Group's FedWatch showed. Futures prices implied traders expected little chance of more than one rate hike in 2019. Back in September, Fed policymakers on average had projected three rate increases for next year. December 7 Friday 10:33AM New York / 1533 GMT Price US T BONDS MAR9 142-19/32 -19/32 10YR TNotes MAR9 120-92/256 -2/32 Price Current Net Yield % Change (bps) Three-month bills 2.3575 2.4039 -0.006 Six-month bills 2.48 2.5457 -0.005 Two-year note 99-254/256 2.7538 -0.004 Three-year note 100-78/256 2.7656 0.000 Five-year note 100-154/256 2.7446 -0.003 Seven-year note 100-100/256 2.8128 0.010 10-year note 101-248/256 2.8953 0.019 30-year bond 103-188/256 3.1806 0.045 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 14.00 0.65 30-year vs 5-year yield 43.50 2.75 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 15.50 -1.00 spread U.S. 3-year dollar swap 12.25 -1.50 spread U.S. 5-year dollar swap 12.50 -0.75 spread U.S. 10-year dollar swap 5.75 -1.00 spread U.S. 30-year dollar swap -13.50 -1.50 spread (Reporting by Richard Leong Editing by Chizu Nomiyama and Dan Grebler)

TREASURIES-U.S. yields slip as traders cool on more Fed rate hikes

06 Dec 2018

* Yield curve steepens from flattest levels in over a decade * Worries about Brexit, U.S.-China trade spur safe-haven bids * ADP U.S. jobs data fall short, U.S. trade gap widest in 10 years * Fed's Bostic sees neutral rate "within shouting distance" (Updates yield levels after Wall Street close) By Richard Leong NEW YORK, Dec 6 U.S. Treasury yields fell on Thursday, with 10-year yields hitting three-month lows, as traders scaled back expectations on the number of rate hikes the Federal Reserve would implement amid weakening economic data and market volatility. Uncertainties over negotiations for Britain to exit the European Union and worries over escalating trade tensions between China and United States following the arrest of a top executive of Chinese technology giant Huawei Technologies Co also stoked safe-haven demand for U.S. government debt, analysts and traders said. The backtracking in traders' rate-hike outlook kindled appetite for short-dated Treasuries, tilting the yield curve slightly away from its flattest levels in over a decade. Earlier this week, shorter-dated yields rose above medium yields for the first time since early 2008, stoking speculation about a U.S. recession in the coming months. "The yield curve is pricing out rate hikes. There are just worries about the global economy," said Karl Haeling, vice president at Landesbank Baden-Wurttemberg in New York. Interest rate futures implied traders now see no more than one rate increase from the Fed in 2019, compared with expectations for possibly two rate hikes a month earlier, according to CME Group's FedWatch program. Fed policymakers are still expected to increase key short-term lending rates by a quarter point to a target range of 2.25-2.50 percent at their Dec. 18-19 meeting. Atlanta Fed President Raphael Bostic said the Fed is within "shouting distance" of a neutral rate where borrowing costs are supportive of growth without stoking inflation. At 4 p.m. (2100 GMT), the yield on two-year Treasury notes fell 5 basis points to 2.758 percent after touching 2.693 percent, its lowest level since Sept. 10. The benchmark 10-year yield hit a three-month trough of 2.826 percent. It was last down nearly 4 basis points at 2.886 percent. The spread between two-year and 10-year yields had widened as much as 2 basis points before finishing 1 basis point wider at 12.85 basis points. On Tuesday, it contracted to 9 basis points, its tightest in over a decade. Treasury yields bounced from session lows as Wall Street pared earlier losses with the Dow coming back from a 785-point drop. U.S. financial markets were closed on Wednesday for a national day of mourning for former U.S. President George H.W. Bush, who died last Friday. Thursday's domestic economic data did not bolster traders' confidence about the economy. The U.S. trade deficit surged to a 10-year high in October as soybean exports fell further and imports of consumer goods rose to a record high. Payroll processor ADP said domestic private payrolls grew by 179,000 last month, fewer than the 195,000 forecast of analysts polled by Reuters. December 6 Thursday 4:01PM EDT/ 2101 GMT Price US T BONDS MAR9 142-29/32 0-24/32 10YR TNotes MAR9 120-88/256 0-84/256 Price Current Net Yield % Change (bps) Three-month bills 2.3625 2.4095 -0.014 Six-month bills 2.4825 2.5488 -0.021 Two-year note 99-253/256 2.7559 -0.055 Three-year note 100-78/256 2.766 -0.053 Five-year note 100-150/256 2.7482 -0.051 Seven-year note 100-104/256 2.8104 -0.045 10-year note 102-12/256 2.8865 -0.037 30-year bond 104-68/256 3.1537 -0.023 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 17.00 1.00 spread U.S. 3-year dollar swap 14.00 0.00 spread U.S. 5-year dollar swap 13.50 0.25 spread U.S. 10-year dollar swap 7.00 1.00 spread U.S. 30-year dollar swap -11.50 1.25 spread (Reporting by Richard Leong; Editing by Bernadette Baum, Susan Thomas and Jonathan Oatis)

TREASURIES-U.S. yields fall as traders cool on more Fed rate hikes

06 Dec 2018

* Yield curve steepens from flattest levels in over a decade * Worries about Brexit, U.S.-China trade spur safe-haven bids * ADP U.S. jobs data fall short, U.S. trade gap widest in 10 years * Fed's Bostic sees neutral rate "within shouting distance" (Updates market action, adds quote) By Richard Leong NEW YORK, Dec 6 U.S. Treasury yields tumbled on Thursday, with 10-year yields hitting three-month lows, as traders scaled back expectations on the number of rate hikes the Federal Reserve would implement amid weakening economic data and market volatility. Uncertainties over negotiations for Britain to exit the European Union and worries over escalating trade tensions between China and United States following the arrest of a top executive of Chinese technology giant Huawei Technologies Co. also stoked safe-haven demand for U.S. government debt, analysts and traders said. The backtracking in the rate-hike outlook kindled appetite for short-dated Treasuries, tilting the yield curve slightly away from its flattest levels in over a decade. Earlier this week, shorter-dated yields rose above medium yields for the first time since early 2008, stoking speculation about a U.S. recession in the coming months. "The yield curve is pricing out rate hikes. There are just worries about the global economy," said Karl Haeling, vice president at Landesbank Baden-Wurttemberg in New York. Interest rate futures implied traders now see no more than one rate increase from the Fed in 2019, compared with expectations for possibly two rate hikes a month earlier, according to CME Group's FedWatch program. Fed policymakers are still expected to increase key short-term lending rates by a quarter point to a target range of 2.25-2.50 percent at their Dec. 18-19 meeting. Atlanta Fed President Raphael Bostic said the Fed is within "shouting distance" of a neutral rate where borrowing costs are supportive of growth without stoking inflation. At 2:28 p.m. (1928 GMT), the yield on two-year Treasury notes fell 6 basis points to 2.763 percent after touching 2.693 percent, its lowest level since Sept. 10. The benchmark 10-year yield hit a three-month trough of 2.826 percent. It was last down over 5 basis points at 2.867 percent. The spread between two-year and 10-year yields had widened as much as 2 basis points before reversing little changed at 11.90 basis points. On Tuesday, it contracted to 9 basis points, its tightest in over a decade. Treasury yields bounced from session lows as Wall Street pared earlier losses with the Dow coming back from a 785 point-drop. U.S. financial markets were closed on Wednesday for a national day of mourning for former U.S. President George H.W. Bush who died last Friday. Thursday's domestic economic data did not bolster traders' confidence about the economy. The U.S. trade deficit surged to a 10-year high in October as soybean exports fell further and imports of consumer goods rose to a record high. Payroll processor ADP said domestic private payrolls grew by 179,000 last month, fewer than the 195,000 forecast of analysts polled by Reuters. December 6 Thursday 2:27PM EDT/ 1927 GMT Price US T BONDS MAR9 143-10/32 1-5/32 10YR TNotes MAR9 120-116/256 0-112/256 Price Current Net Yield % Change (bps) Three-month bills 2.365 2.4121 -0.011 Six-month bills 2.48 2.5462 -0.024 Two-year note 100-1/256 2.7478 -0.063 Three-year note 100-84/256 2.7576 -0.061 Five-year note 100-162/256 2.7381 -0.061 Seven-year note 100-128/256 2.7956 -0.059 10-year note 102-56/256 2.8667 -0.056 30-year bond 104-204/256 3.127 -0.050 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 16.00 0.00 spread U.S. 3-year dollar swap 13.00 -1.00 spread U.S. 5-year dollar swap 12.75 -0.50 spread U.S. 10-year dollar swap 6.25 0.25 spread U.S. 30-year dollar swap -12.00 0.75 spread (Reporting by Richard Leong; Editing by Bernadette Baum and Susan Thomas)

TREASURIES-U.S. yields tumble as traders pare Fed rate-hike outlook

06 Dec 2018

* Yield curve steepens from flattest levels in over a decade * Worries about Brexit, U.S.-China trade spur safe-haven bids * ADP U.S. jobs data fall short, U.S. trade gap widest in 10 years (Updates market action, adds quote, table, graphic) By Richard Leong NEW YORK, Dec 6 U.S. Treasury yields tumbled on Thursday, with 10-year yields hitting three-month lows, as traders scaled back expectations on the number of rate hikes the Federal Reserve would implement amid weakening economic data and market volatility. Uncertainties over negotiations for Britain to exit the European Union and worries over escalating trade tensions between China and United States following the arrest of a top executive of Chinese technology giant Huawei Technologies Co. also stoked safe-haven demand for U.S. government debt, analysts and traders said. The shift in the rate-hike outlook kindled appetite for short-dated Treasuries, tilting the yield curve slightly away from its flattest levels in over a decade. Earlier this week, shorter-dated yields rose above medium yields for the first time since early 2008, stoking speculation about a U.S. recession in the coming months. "The outperformance of the short-end of the yield curve is driven by a repricing of rate-hike expectations," said Jonathan Cohn, interest rate strategist at Credit Suisse in New York. Interest rate futures implied traders now see no more than one rate increase from the Fed in 2019, compared with expectations for possibly two rate hikes a month earlier, according to CME Group's FedWatch program. Fed policymakers are still expected to increase key short-term lending rates by a quarter point to a target range of 2.25-2.50 percent at their Dec. 18-19 meeting. At 10:18 a.m. (1518 GMT), the yield on two-year Treasury notes fell 10 basis points to 2.711 percent after touching its lowest level since Sept. 10. The benchmark 10-year yield hit a three-month trough of 2.845 percent. It was last down 7 basis points at 2.851 percent. The spread between two-year and 10-year yields widened 2 basis points to 13.60 basis points after it narrowed to 9 basis points on Tuesday, its tightest level in over a decade. U.S. financial markets were closed on Wednesday for a national day of mourning for former U.S. President George H.W. Bush who died last Friday. Thursday's domestic economic data did not bolster traders' confidence about the economy. The U.S. trade deficit surged to a 10-year high in October as soybean exports fell further and imports of consumer goods rose to a record high, suggesting the Trump administration's tariff-related measures to shrink the trade gap likely have been ineffective. Payroll processor ADP said domestic private payrolls grew by 179,000 last month, fewer than the 195,000 forecast of analysts polled by Reuters. December 6 Thursday 10:14AM EDT/ 1514 GMT Price US T BONDS MAR9 143-9/32 1-4/32 10YR TNotes MAR9 120-168/256 0-164/256 Price Current Net Yield % Change (bps) Three-month bills 2.37 2.4172 -0.006 Six-month bills 2.4825 2.5488 -0.021 Two-year note 100-19/256 2.7111 -0.100 Three-year note 100-112/256 2.7187 -0.100 Five-year note 100-204/256 2.7028 -0.096 Seven-year note 100-168/256 2.7709 -0.084 10-year note 102-92/256 2.8506 -0.072 30-year bond 104-200/256 3.1278 -0.049 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 16.75 0.75 spread U.S. 3-year dollar swap 14.00 0.00 spread U.S. 5-year dollar swap 13.25 0.00 spread U.S. 10-year dollar swap 6.00 0.00 spread U.S. 30-year dollar swap -12.25 0.50 spread (Reporting by Richard Leong; Editing by Bernadette Baum)

One part of the U.S. yield curve just inverted; what does that mean?

06 Dec 2018

NEW YORK Part of the U.S. Treasury yield curve "inverted" this week, setting off debate over whether it is delivering a classic signal of oncoming recession or it has just developed a short-term kink that can be explained away by technical reasons.

TREASURIES-U.S. yield inversion spreads on concerns about slowing growth

04 Dec 2018

* Parts of yield curve invert for first time in over a decade * Market rally seen fed by short-covering, exit from curve bets * Benchmark 10-year yields fall to lowest in nearly 3 months * U.S. markets closed Wednesday to mourn former President Bush (Updates market action, adds quote) By Richard Leong NEW YORK, Dec 4 The difference between short-dated and long-dated U.S. Treasury yields narrowed further on Tuesday as the inversion of the yield curve spread between more maturities, prompted by worries about a slowdown in U.S. economic growth. The yield on the two-year note briefly rose above the three-year yield for the first time since January 2008. Two-year and three-year yields held above the five-year yield for a second day, Tradeweb data showed. "A lot of the rally in Treasuries has to do with the sell-off in stocks," said John Canavan, market strategist at Stone & McCarthy Research Associates in New York. Concerns about weakening U.S. growth caused traders to exit earlier bets on rising bond yields, pushing longer-dated yields to their lowest levels in nearly three months. Wall Street's main gauges tumbled, with the benchmark S&P 500 falling 2.75 percent. Yield curve inversions are seen generally as precursors of a recession. An inversion of the two-year and 10-year yields preceded each U.S. recession in the past 50 years. So far, there has been no inversion of the two-year and 10-year. The 10-year yield clung to an 11-basis-point margin over its two-year counterpart, although it was the smallest one in over a decade. "It doesn't signal there's a recession anytime soon. It is signaling expectations of a growth slowdown," Deborah Cunningham, chief investment officer of money markets at Federated Investment Management Co in Pittsburgh, said of the parts of the curve that inverted. At 3:29 p.m. EST (2029 GMT), the 10-year Treasury yield shed nearly 8 basis points, to 2.915 percent, after hitting its lowest level since Sept. 7. The 30-year yield touched 3.129 percent, the lowest level since Sept 18. Concerns about weaker growth have stoked bets the Federal Reserve will end its campaign to raise interest rates sooner than previously thought, analysts said. The futures market implied traders expect the U.S. central bank will raise rates by a quarter percentage point to a range of 2.25 percent to 2.50 percent at its next policy meeting, on Dec. 18-19, according to CME Group's FedWatch program. However, traders scaled back their expectations of two rate hikes in 2019 to less than 10 percent, down from 59 percent a month ago. New York Fed President John Williams on Tuesday said he expects further rate hikes in the face of a strong economy, but that did not cause traders to reduce their outlook on the number of future Fed rate hikes. U.S. stock and bond markets will be closed on Wednesday for a national day of mourning for former U.S. President George H.W. Bush, who died on Friday. December 4 Tuesday 3:37PM EDT/ 2037 GMT Price US T BONDS MAR9 142-11/32 1-26/32 10YR TNotes MAR9 120-20/256 0-124/256 Price Current Net Yield % Change (bps) Three-month bills 2.375 2.4227 0.018 Six-month bills 2.5025 2.5698 0.008 Two-year note 99-229/256 2.8048 -0.028 Three-year note 100-44/256 2.8134 -0.031 Five-year note 100-100/256 2.7905 -0.049 Seven-year note 100-48/256 2.8452 -0.065 10-year note 101-208/256 2.9136 -0.077 30-year bond 104-8/256 3.1656 -0.112 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 16.00 -0.75 spread U.S. 3-year dollar swap 14.25 -1.25 spread U.S. 5-year dollar swap 13.50 -0.75 spread U.S. 10-year dollar swap 6.00 0.50 spread U.S. 30-year dollar swap -12.75 1.25 spread (Reporting by Richard Leong Editing by Paul Simao and Leslie Adler)

TREASURIES-U.S. yield inversion spreads on worries about slowing growth

04 Dec 2018

* Parts of yield curve inverted for first time in over a decade * Traders shrug off upbeat comments from Fed's Williams * U.S. markets closed Wednesday to mourn former President Bush (Updates yield levels, adds graphic) By Richard Leong NEW YORK, Dec 4 The premium between shorter-dated U.S. Treasury yields above longer-dated ones rose on Tuesday, spreading the inversion of the yield curve between more maturities as traders piled on bets on a slowdown in U.S. economic growth. The two-year yield briefly rose above the three-year yield for the first time since January 2008. Two-year and three-year yields held above the five-year yield for a second day, Tradeweb data showed. Expectations that business and consumer activity would fall in the coming months spurred buying of longer-dated Treasuries, sending the benchmark 10-year yield to its lowest levels since mid-September. The inversion of the two-year and 10-year yields preceded the past three U.S. recessions. So far, that inversion has not occurred. The 10-year yield held a 12-basis-point margin over its two-year counterpart, although it was the smallest one in over a decade. "It doesn't signal there's a recession anytime soon. It is signaling expectations of a growth slowdown," Deborah Cunningham, chief investment officer of money markets at Federated Investment Management Co. in Pittsburgh, said of the parts of the curve that inverted. At 11:37 a.m. EST, the 10-year Treasury yield fell five basis points to 2.939 percent after hitting its lowest level since Sept. 11. The 30-year yield touched 3.198 percent, the lowest since Oct. 3. Concerns about weaker growth have also stoked bets the Federal Reserve would end its campaign to raise interest rates sooner than previously thought, analysts said. The futures market implied traders expect the U.S. central bank will raise rates by a quarter percentage point to a range of 2.25 percent to 2.50 percent at its next policy meeting on Dec. 18-19, according to CME Group's FedWatch program. However, they scaled back their expectations of two rate hikes in 2019 to less than 10 percent, down from 59 percent a month ago. The traders' reduced outlook on the number of future Fed rate hikes did not change following upbeat remarks on the economy from New York Fed President John Williams. "Given this outlook I describe of strong growth, strong labor market and inflation near our goal - and taking into account all the various risks around the outlook - I do continue to expect that further gradual increases in interest rates will best foster a sustained economic expansion and a sustained achievement of our dual mandate," Williams told reporters. U.S. stock and bond markets will be closed on Wednesday for a national day of mourning for former U.S. President George H.W. Bush, who died on Friday. December 4 Tuesday 11:38AM EDT/ 1638 GMT Price US T BONDS DEC8 142-11/32 1-6/32 10YR TNotes MAR9 119-236/256 0-84/256 Price Current Net Yield % Change (bps) Three-month bills 2.375 2.4227 0.018 Six-month bills 2.5 2.5672 0.005 Two-year note 99-221/256 2.8211 -0.012 Three-year note 100-34/256 2.8273 -0.017 Five-year note 100-78/256 2.809 -0.030 Seven-year note 100-12/256 2.8675 -0.043 10-year note 101-148/256 2.9407 -0.050 30-year bond 103-92/256 3.1997 -0.078 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 16.25 -0.50 spread U.S. 3-year dollar swap 15.00 -0.50 spread U.S. 5-year dollar swap 13.75 -0.50 spread U.S. 10-year dollar swap 6.00 0.50 spread U.S. 30-year dollar swap -12.50 1.50 spread (Reporting by Richard Leong Editing by Frances Kerry and Paul Simao)

TREASURIES-U.S. yield inversion spreads on worries about slowing growth

04 Dec 2018

* Parts of U.S. yield curve inverted 1st time in over a decade * Traders shrug off upbeat comments from Fed's Williams * U.S. markets to close Wednesday to mourn President Bush (Updates market action, adds quote) By Richard Leong NEW YORK, Dec 4 The premium between shorter-dated U.S. Treasury yields above longer-dated ones rose on Tuesday, spreading the inversion of the yield curve between more maturities as traders piled on bets on slowing U.S. economic growth. The two-year yield briefly rose above the three-year yield for the first time since January 2008. Two-year and three-year yields held above the five-year yield for a second day, Tradeweb data showed. Expectations that business and consumer activities would fall in the coming months spurred buying of longer-dated Treasuries, sending the benchmark 10-year yield to its lowest levels since mid-September. The inversion of the two-year and 10-year yields preceded the past three U.S. recessions. So far that inversion has not occurred. The 10-year yield held a 12 basis point margin over its two-year counterpart, albeit it was the smallest one in over a decade. "It doesn't signal there's a recession anytime soon. It is signaling expectations of a growth slowdown," Deborah Cunningham, chief investment officer of money markets at Federated Investment Management Co. in Pittsburgh, said of the parts of the curve that inverted. At 11:01 a.m., the 10-year Treasury yield fell nearly 4 basis points to 2.953 percent after hitting its lowest level since Sept. 11. The 30-year yield touched 3.203 percent, the lowest since Oct. 3. Concerns about weaker growth has also stoked bets the Federal Reserve would end its rate-hike campaign sooner than previously thought, analysts said. The futures market implied traders expect the U.S. central bank will raise interest rates by a quarter point to 2.25-2.50 percent at its next policy meeting on Dec. 18-19, according to CME Group's FedWatch program. However, they scaled back their expectations of two rate hikes in 2019 to less than 10 percent, down from 59 percent a month ago. The traders' reduced outlook on the number of future Fed rate hikes did not alter following upbeat remarks on the economy from New York Federal Reserve President John Williams. "Given this outlook I describe of strong growth, strong labor market and inflation near our goal - and taking into account all the various risks around the outlook - I do continue to expect that further gradual increases in interest rates will best foster a sustained economic expansion and a sustained achievement of our dual mandate," Williams told reporters. U.S. stock and bond markets will be closed on Wednesday for a national day of mourning for U.S. President George H.W. Bush, who died on Friday. December 4 Tuesday 11:25AM EDT/ 1625 GMT Price US T BONDS DEC8 142-12/32 1-7/32 10YR TNotes MAR9 119-232/256 0-80/256 Price Current Net Yield % Change (bps) Three-month bills 2.375 2.4227 0.018 Six-month bills 2.5 2.5672 0.005 Two-year note 99-220/256 2.8232 -0.010 Three-year note 100-32/256 2.8301 -0.014 Five-year note 100-76/256 2.8107 -0.028 Seven-year note 100-8/256 2.87 -0.040 10-year note 101-148/256 2.9407 -0.050 30-year bond 103-92/256 3.1997 -0.078 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 16.25 -0.50 spread U.S. 3-year dollar swap 15.00 -0.50 spread U.S. 5-year dollar swap 13.75 -0.50 spread U.S. 10-year dollar swap 6.00 0.50 spread U.S. 30-year dollar swap -12.50 1.50 spread (Reporting by Richard Leong Editing by Frances Kerry)

Inexplicable spikes still imperil Treasury market: Fed's Brainard

03 Dec 2018

NEW YORK Four years after the so-called "flash rally" spooked U.S. investors and regulators, the Federal Reserve remains concerned that the U.S. Treasury market still occasionally moves sharply without any apparent reason, a top Fed official said on Monday.

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