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Ross Kerber

UPDATE 3-TREASURIES-U.S. Treasury yields jump after non-farm payrolls rise

06 Dec 2019

(Updates market activity) By Ross Kerber and Arjun Panchadar BOSTON/BENGALURU, Dec 6 U.S. Treasury yields rose on Friday after the Labor Department reported job growth increased by the most in 10 months in November. The benchmark 10-year yield was 4.3 basis points higher at 1.8381% in afternoon trading, reflecting greater investor appetite for risk. Analysts said the jobs report showed an underlying strength in the U.S. economy that offset a series of mixed signals from other reports earlier in the week. U.S. stocks also advanced on the jobs report and on a note of optimism about ongoing U.S.-China trade negotiations. "Basically the market is very positive on this news because what it does is, it confirms a strong economy even though we have seen a little weakness come in," said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey. "This is going to throw a wrench into the argument that the economy is slowing down. Companies don't hire if the economy is slowing down, companies go the other way," Bakhos said. The Labor Department's closely watched monthly employment report showed steady wage gains and the unemployment rate falling back to 3.5%. It was seen as validating the U.S. Federal Reserve's decision last month to cut interest rates for the third time this year but to signal a pause in its easing cycle. The 10-year yield rose as much as 6.9 basis points earlier on Friday after the jobs report. The retrenchment may have reflected a cooler view that the report could have shown strong seasonal-but-temporary hiring, or be subject to downward revisions later, said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott. "The forward-looking implications of today's labor report were not many," he said. The two-year yield, which typically moves in step with interest rate expectations, was up 3.5 basis points to 1.6169% on Friday afternoon. December 6 Friday 2:55PM New York / 1955 GMT Price Current Net Yield % Change (bps) Three-month bills 1.4925 1.5229 -0.023 Six-month bills 1.5125 1.5493 -0.003 Two-year note 99-198/256 1.6169 0.035 Three-year note 99-246/256 1.6386 0.044 Five-year note 99-56/256 1.6642 0.044 Seven-year note 99-8/256 1.7732 0.045 10-year note 99-52/256 1.8381 0.043 30-year bond 102-16/256 2.2795 0.035 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 1.50 0.00 spread U.S. 3-year dollar swap -2.75 -0.25 spread U.S. 5-year dollar swap -3.25 -0.25 spread U.S. 10-year dollar swap -7.25 0.00 spread U.S. 30-year dollar swap -33.00 0.75 spread (Reporting by Ross Kerber in Boston; additional reporting by Arjun Panchadar in Bengaluru; Editing by Chizu Nomiyama and Jonathan Oatis)

UPDATE 2-U.S. Treasury yields jump after non-farm payrolls rise

06 Dec 2019

(Updates market activity and adds analyst comment) By Ross Kerber and Arjun Panchadar BOSTON/BENGALURU, Dec 6 U.S. Treasury yields rose on Friday after the Labor Department reported job growth increased by the most in 10 months in November. The benchmark 10-year yield was 4 basis points higher at 1.8346% in late morning trading, reflecting greater investor appetite for risk. Analysts said the jobs report showed an underlying strength in the U.S. economy that offset a series of mixed signals from other reports earlier in the week. U.S. stocks also advanced. "Basically the market is very positive on this news because what it does is, it confirms a strong economy even though we have seen a little weakness come in," said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey. "This is going to throw a wrench into the argument that the economy is slowing down. Companies don't hire if the economy is slowing down, companies go the other way," Bakhos said. The Labor Department's closely watched monthly employment report showed steady wage gains and the unemployment rate falling back to 3.5%. It was seen as validating the U.S. Federal Reserve's decision last month to cut interest rates for the third time this year but to signal a pause in its easing cycle. The 10-year yield rose as much as 6.9 basis points earlier on Friday after the jobs report. The retrenchment may have reflected a cooler view that the report could have shown strong seasonal-but-temporary hiring, or be subject to downward revisions later, said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott. "The forward-looking implications of today's labor report were not many," he said. The two-year yield, which typically moves in step with interest rate expectations, was up 3.3 basis points to 1.6149% on Friday morning. December 6 Friday 11:14AM New York / 1614 GMT Price Price Current Net Yield % Change (bps) Three-month bills 1.5 1.5305 -0.015 Six-month bills 1.5175 1.5545 0.002 Two-year note 99-199/256 1.6149 0.033 Three-year note 99-250/256 1.6331 0.038 Five-year note 99-56/256 1.6642 0.044 Seven-year note 99-8/256 1.7732 0.045 10-year note 99-60/256 1.8346 0.040 30-year bond 102-60/256 2.2717 0.027 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 1.50 0.00 spread U.S. 3-year dollar swap -2.50 0.00 spread U.S. 5-year dollar swap -3.50 -0.50 spread U.S. 10-year dollar swap -7.25 0.00 spread U.S. 30-year dollar swap -33.00 0.75 spread (Reporting by Ross Kerber in Boston; additional reporting by Arjun Panchadar in Bengaluru; Editing by Chizu Nomiyama and Jonathan Oatis)

UPDATE 1-TREASURIES-Yields rise on positive economic reports, then pare gains

05 Dec 2019

(Adds comment on positioning, updates market activity) By Ross Kerber BOSTON, Dec 5 U.S. Treasury yields rose on Thursday as a range of reports indicated continued economic growth, then pared the gains in afternoon trading. The benchmark 10-year yield was 1.7 basis points higher at 1.7982% in afternoon trading, reflecting increased investor appetite for risk, after rising as much as 4.1 basis points in the morning. Analysts attributed the yield increase to factors like a fall in weekly jobless claims and a decline in the U.S. trade deficit, which suggested trade could contribute to economic growth in the fourth quarter. In addition, oil prices rose on Thursday ahead of an OPEC meeting expected to lead to deeper output cuts. "All the factors are laying out better-than-expected economic growth," said Stan Shipley, research analyst at Evercore ISI. "Everything is going one way here," he said. Speaking in Washington in the early afternoon U.S. President Donald Trump did threaten trade action with countries that are not contributing enough to their defense. But overall no news offered an obvious reason for the later decline, said Lou Brien, market strategist for DRW Trading, making it likely to indicate trade flows as investors repositioning bond portfolios. There are "not the obvious suspects we can look at" to explain the lower yields, he said. The two-year yield typically moves in step with interest rate expectations. On Thursday afternoon it was up less than a basis point to 1.5863%. Thursday's trading marked the second day of higher yields after relatively positive comments by U.S. President Donald Trump raised hopes of a trade agreement with China, the most unpredictable factor in the market, and Wall Street's main indexes also rose. The Commerce Department said the trade deficit tumbled 7.6% to $47.2 billion, the smallest since May 2018, as both imports and exports of goods declined. It was the second straight monthly fall in the trade bill and the percent drop was the biggest since January. While Washington and Beijing are working on a "phase one" trade deal, the United States has ratcheted up tensions with other trade partners. Despite the trade tensions there are few signs they are affecting the labor market. In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 203,000 for the week ended Nov. 30, the lowest since mid-April. The claims data has no bearing on November's employment report, which is scheduled for release on Friday. Price Current Net Yield % Change (bps) Three-month bills 1.5125 1.5435 -0.016 Six-month bills 1.515 1.5521 -0.010 Two-year note 99-212/256 1.5883 0.004 Three-year note 100-20/256 1.5976 0.006 Five-year note 99-104/256 1.6245 0.019 Seven-year note 99-76/256 1.7323 0.016 10-year note 99-144/256 1.7982 0.017 30-year bond 102-208/256 2.2454 0.016 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 1.50 0.25 spread U.S. 3-year dollar swap -2.25 0.50 spread U.S. 5-year dollar swap -3.25 0.00 spread U.S. 10-year dollar swap -7.25 0.50 spread U.S. 30-year dollar swap -33.50 0.50 spread (Reporting by Ross Kerber; Editing by Steve Orlofsky and Chizu Nomiyama)

TREASURIES-Yields rise on positive economic reports

05 Dec 2019

By Ross Kerber BOSTON, Dec 5 U.S. Treasury yields rose on Thursday as a range of reports indicated continued economic growth. The benchmark 10-year yield was four basis points higher at 1.8207 in morning trading, reflecting increased investor appetite for risk. Analysts pointed to factors including a fall in weekly jobless claims and a decline in the U.S. trade deficit, which suggested trade could contribute to economic growth in the fourth quarter. In addition, oil prices rose on Thursday ahead of an OPEC meeting expected to lead to deeper output cuts. "All the factors are laying out better-than-expected economic growth," said Stan Shipley, research analyst at Evercore ISI. "Everything is going one way here," he said. The two-year yield typically moves in step with interest rate expectations. On Thursday morning it was up 1.8 basis points to 1.6024%. Thursday's trading marked the second day of higher yields after relatively positive comments by U.S. President Donald Trump raised hopes of a trade agreement with China, the most unpredictable factor in the market, and Wall Street's main indexes also rose. The Commerce Department said the trade deficit tumbled 7.6% to $47.2 billion, the smallest since May 2018, as both imports and exports of goods declined. It was the second straight monthly fall in the trade bill and the percent drop was the biggest since January. While Washington and Beijing are working on a "phase one" trade deal, the United States has ratcheted up tensions with other trade partners. Despite the trade tensions there are few signs they are affecting the labor market. In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 203,000 for the week ended Nov. 30, the lowest since mid-April. The claims data has no bearing on November's employment report, which is scheduled for release on Friday. Price Current Net Yield % Change (bps) Three-month bills 1.52 1.5512 -0.008 Six-month bills 1.5225 1.5598 -0.002 Two-year note 99-205/256 1.6024 0.018 Three-year note 100-4/256 1.6194 0.027 Five-year note 99-78/256 1.6459 0.040 Seven-year note 99-36/256 1.7563 0.040 10-year note 99-92/256 1.8207 0.040 30-year bond 102-100/256 2.2646 0.036 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 1.50 0.25 spread U.S. 3-year dollar swap -2.75 0.00 spread U.S. 5-year dollar swap -3.25 0.00 spread U.S. 10-year dollar swap -7.50 0.25 spread U.S. 30-year dollar swap -33.75 0.25 spread (Reporting by Ross Kerber; Editing by Steve Orlofsky )

TREASURIES-U.S. yields rise on trade outlook, setting aside economic data

04 Dec 2019

* Trump says U.S.-China trade talks going 'very well' * U.S. ISM services index falls in November * U.S. ADP private sector jobs number misses forecast (Recasts to focus on mixed economic data, adds investor comment, updates prices) By Ross Kerber BOSTON, Dec 4 U.S. Treasury yields rose on Wednesday on an improved outlook for a U.S.-China trade deal, and as investors brushed off mixed U.S. economic data. The benchmark 10-year yield was up 7.4 basis points at 1.7827% in afternoon trading as the global appetite for risk increased. U.S. President Donald Trump said on Wednesday at a meeting of NATO leaders near London that talks with China were going "very well." In contrast, his comments on Tuesday raised the prospect of extended trade tensions between the world's two biggest economies, and pushed the 10-year Treasury yield the lowest since May 2018. Wednesday's turnaround showed a potential trade deal was more important to investors than a pair of relatively weak November U.S. economic reports. U.S. services sector activity slowed, and other data showed private employers hired the fewest workers in six months. "Trade is everything right now," said Mary Ann Hurley, vice president for fixed-income trading at D. A. Davidson. She also noted how Trump's mixed messages from day to day created volatility. "You get stuff out of Trump, it's 180 degrees different day by day. Either it (trade talks) are going really well, or he's not in a hurry to make a deal," she said. Tony Bedikian, head of global markets for Citizens Bank, said concrete trade steps are likely needed to move 10-year yields out of the range of 1.5% to 2% where they have traded since October. "Right now we are mired in this range, and we need some more definitive results coming out of the trade talks" before 10-year yields would again exceed 2%, he said. Traders are focused on the U.S. Labor Department's more comprehensive nonfarm payrolls report due out on Friday, which includes both public- and private-sector employment. The two-year yield, typically seen as indicator of interest rate expectations, rose 5.2 basis points to 1.5842% in afternoon trading. The spread between the two- and 10-year yields widened 2.05 basis points. The movement suggested investors overall expect the U.S. Federal Reserve to hold interest rates unchanged "for the foreseeable future," Bedikian said. December 4 Wednesday 2:27PM New York / 1927 GMT Price Current Net Yield % Change (bps) Three-month bills 1.5275 1.559 -0.020 Six-month bills 1.5325 1.5702 -0.011 Two-year note 99-214/256 1.5842 0.052 Three-year note 100-24/256 1.5922 0.062 Five-year note 99-126/256 1.6064 0.072 Seven-year note 99-104/256 1.7155 0.071 10-year note 99-184/256 1.7809 0.072 30-year bond 103-60/256 2.2264 0.066 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 1.50 0.25 spread U.S. 3-year dollar swap -2.75 0.50 spread U.S. 5-year dollar swap -3.25 0.00 spread U.S. 10-year dollar swap -7.75 0.25 spread U.S. 30-year dollar swap -34.00 0.25 spread (Reporting by Ross Kerber; Editing by Andrea Ricci and Richard Chang)

TREASURIES-Hanging on Trump's words, U.S. Treasury yields rise on trade outlook

04 Dec 2019

By Ross Kerber BOSTON, Dec 4 U.S. Treasury yields rose on Wednesday on a more positive outlook for a trade deal with China and showing the market zeroed in on slight changes in comments from U.S. President Donald Trump. The benchmark 10-year yield was up 5.8 basis points to 1.768% in morning trade, part of a broader enthusiasm for risk globally. Trump said on Wednesday that talks with China were going "very well," speaking at a meeting of NATO leaders near London. His remarks were taken as a contrast with comments he made on Tuesday, which raised the prospect of a long extension of trade tensions between the world's two biggest economies. In response, U.S. yields had fallen and at one point the 10-year was at its lowest since May of 2018. Wednesday's turnaround showed investors treating Trump's remarks with the same sensitivity they apply to the words of U.S. Federal Reserve officials speaking about interest rates, said Tony Bedikian, head of global markets for Citizens Bank. "It's similar to Fedspeak," he said. At the same time he said investors are probably overly focused on the presidential remarks since 10-year yields have traded in the range of 1.5% to 2% since October. "Right now we are mired in this range, and we need some more definitive results coming out of the trade talks" before 10-year yields would again exceed 2%, he said. The increases also showed traders shrugging off some economic news. U.S. private-sector job growth unexpectedly slowed to its weakest pace in six months in November, and goods producers and construction firms cut jobs, a private survey said on Wednesday. The two-year yield, typically seen as indicator of interest rate expectations, rose 3.8 basis points to 1.570% in morning trading. The spread between the two- and 10-year yields widened 1.75 basis points. The movement suggested investors overall expect the U.S. central bank to hold interest rates unchanged "for the foreseeable future," Bedikian said. Also on Wednesday the Bank of Canada held its overnight rate at 1.75% as expected and cited early signs the global economy was stabilizing. December 4 Wednesday 10:17AM New York / 1517 GMT Price Current Net Yield % Change (bps) Three-month bills 1.5475 1.5795 0.000 Six-month bills 1.5375 1.5754 -0.006 Two-year note 99-222/256 1.5681 0.036 Three-year note 100-38/256 1.5731 0.043 Five-year note 99-154/256 1.5834 0.049 Seven-year note 99-140/256 1.694 0.050 10-year note 99-220/256 1.7654 0.056 30-year bond 103-84/256 2.2222 0.062 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 1.25 0.00 spread U.S. 3-year dollar swap -2.75 0.50 spread U.S. 5-year dollar swap -3.00 0.25 spread U.S. 10-year dollar swap -7.75 0.25 spread U.S. 30-year dollar swap -34.00 0.25 spread (Reporting by Ross Kerber, Editing by Andrea Ricci)

TREASURIES-Trump's 'no deadline' trade comment drives down U.S. yields

03 Dec 2019

BOSTON, Dec 3 U.S. Treasury yields fell sharply on Tuesday, as tough trade talk from U.S. President Donald Trump and other world leaders triggered a flight to safety among investors.

TREASURIES-Trump's 'no deadline' trade comment drives down U.S. yields

03 Dec 2019

BOSTON, Dec 3 U.S. Treasury yields fell on Tuesday, as tough trade talk from U.S. President Donald Trump and other world leaders triggered a flight to safety among investors.

TREASURIES-Yield curve steeper on weak manufacturing, construction data

02 Dec 2019

BOSTON/NEW YORK, Dec 2 The Treasury yield curve was steeper on Monday following two reports showing U.S. factory activity and construction spending fell unexpectedly, sounding a cautionary note on the U.S. economy despite a recent string of upbeat data.

TREASURIES-Yield curve steeper on weak manufacturing, construction data

02 Dec 2019

BOSTON, Dec 2 The Treasury yield curve was steeper on Monday following two reports showing U.S. factory activity and construction spending fell unexpectedly, sounding a cautionary note on the U.S. economy despite a recent string of upbeat data.

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