Showing posts with label Treasury Yields Report. Show all posts
Showing posts with label Treasury Yields Report. Show all posts

Nov 14, 2019

Bonds | Treasury Yields Report: Treasury yields fall amid uncertainty over US-China trade deal

Yun Li, Silvia Amaro


US 3-MOU.S. 3 Month Treasury1.5740.0020.00
US 1-YRU.S. 1 Year Treasury1.555-0.0110.00
US 2-YRU.S. 2 Year Treasury1.591-0.0370.00
US 5-YRU.S. 5 Year Treasury1.625-0.0510.00
US 10-YRU.S. 10 Year Treasury1.817-0.0520.00
US 30-YRU.S. 30 Year Treasury2.299-0.050.00
Market players are largely focused on U.S.-China trade talks, after reports suggested that there is an impasse over issues such as agricultural products and intellectual property. President Trump had announced last month that the U.S. had reached an agreement in principle with China and that they were close to signing a phase one trade deal.
Chinese Ministry of Commerce spokesman Gao Feng said overnight that China and the U.S. are holding “in-depth” discussions about a phase one deal, but added the rolling back of some tariffs is key to striking a deal.
China and the U.S. have imposed tariffs on billions of dollars’ worth of one another’s goods since the start of 2018, battering financial markets and souring business and consumer sentiment.
On the data front, weekly jobless claims reached 225,000 last week, the highest number since June. Meanwhile, U.S. producer prices had their biggest gain in six months in October.
“Underlying the drift lower in rates has been the recognition that not much has actually changed on the global macro front in the past week and a half,” said Ian Lyngen, head of U.S. rates at BMO Capital Markets. “The Fed’s not cutting in December, global growth is slowing (though perhaps not as sharply as feared), and a trade deal between the US and China is still in the works, and will be for some time.”
Federal Reserve Chairman Jerome Powell said in his testimony on Wednesday interest rates are unlikely to change as long as the economy keeps growing.
New York Fed President John Williams said in a speech Thursday that interest rates and the economy are in “a good place.”
The Treasury is due to auction $55 billion in 4-week bills and $40 billion in 8-week bills.

Nov 7, 2019

Bonds | Treasury Yields Report: Rates surge with the 10-year Treasury yield jumping the most since Trump's election

Thomas Franck

A steady climb in yields intensified Thursday afternoon with the yield on the benchmark 10-year Treasury note jumping the most since President Donald Trump’s election. The move coincided with a risk-on move by investors out of bonds and into stocks with the S&P 500 jumping to a new record on Thursday.
The 10-year yield jumped 15 basis points to 1.96%, the biggest jump since the 20-basis-point move the day after Trump was elected in 2016. The move brought the yield to its highest level since August. A basis point is 0.01%; yields rise as bond prices fall.
The yield curve, which inverted over the summer, raising recession fears, steepened to the widest since January. A dramatic, monthslong slide in the 10-year Treasury yield over the summer pushed long-term yields below rates on short-term debt, a rare market phenomenon that many economists view as a reliable recession signal.
But the recent rebound in the 10-year rate to just under 2% has corrected the yield curve’s inversion. The spread between the 10-year yield and the 2-year yield was last seen at 25 basis points; the 10-year/3-month spread was at 38 basis points.
But Thursday’s moves, though noteworthy, added to an already-sizable resurgence in yields in the foruth quarter. Since the summertime inversion and recession fears, bond yields have been ushered higher by a combination of better-than-expected corporate profits, the end of the Federal Reserve’s “mid-cycle” cuts and improvement in U.S.-China trade relations.
The 10-year yield is up 50 basis points since bottoming at a three-year low of 1.441% in early September. Half of that climb has occurred since Oct. 1, the start of the fourth quarter.
Investors dumped bonds and bought stocks amid reports that China and the U.S. have agreed to cancel additional tariffs that were imposed during their trade war. Traders are following U.S.-China trade discussions amid growing concerns that the signing of the “phase one” deal could be delayed until December.
President Donald Trump delivers remarks at a Keep America Great Rally at the Rupp Arena in Lexington, Kentucky, November 4, 2019.
Yuri Gripas | Reuters
“This is a very substantial sell-off across the curve,” said Benjamin Jeffery, rates strategist at BMO.
“Given the lack of new economic information today, it’s more a result of the positive trade war headlines and that coupled with a 30-year funding auction,” he added. “The positive trade headline was the catalyst and more technical factors are what’s driving the bulk of the move after that initial knee-jerk.”
Gao Feng, a ministry spokesperson for China’s Commerce Ministry, said that the U.S. and China agreed to simultaneously cancel some existing tariffs on one another’s goods, according to the country’s state broadcaster. The ministry spokesperson said that both sides were closer to a so-called “phase one” trade agreement following constructive negotiations over the past two weeks.
The sell-off in long-term U.S. bonds on Thursday rivaled that which occurred on the day following the 2016 presidential election, when the yield on the 10-year Treasury climbed more than 20 basis points. Investors pivoted out of bonds and into stocks on Nov. 9, 2016 as Wall Street flocked to equities in the hopes that Trump’s emphasis on deregulation and tax cuts would ultimately trigger a renewed market rally.
The S&P 500 soared more than 1% the day after Trump’s election.
The U.S. equity market posted similar gains on Thursday, as energy, communication services and financials led stocks to record highs. The Dow Jones Industrial Average rose 230 points and the S&P 500 climbed 0.45%; both hit record intraday highs.
Trump is scheduled to be in London for a gathering of NATO leaders on Dec. 3 - 4, and a potential signing could happen before or after that visit, people close to the talks told CNBC. However, China has reportedly agreed to cancel existing tariffs with the U.S. in a phased way.
The latest weekly jobless claims figures also helped buoy sentiment on Thursday. The Labor Department reported that the number of Americans filing applications for unemployment benefits fell more than expected last week, yet another signal that the U.S. jobs market remains strong.
Initial claims for state unemployment benefits decreased 8,000 to a seasonally adjusted 211,000 for the week ended Nov. 2, the government said.

Employment grew faster than expected in October, according to the Labor Department’s update to the employment situation published last week. Firms added 128,000 jobs, even though a strike by workers at General Motors sidelined 46,000 employees at the automaker’s plants in Michigan and Kentucky.
The Treasury Department auctioned $19 billion in 30-year bonds at a high yield of 2.43%. The bid-to-cover ratio, an indicator of demand, was 2.23. Indirect bidders, which include major central banks, were awarded 58.8%. Direct bidders, which include domestic money managers, bought 20.5%.
CNBC’s Yun Li contributed reporting.


US 3-MOU.S. 3 Month Treasury1.5610.0050.00
US 1-YRU.S. 1 Year Treasury1.5870.0080.00
US 2-YRU.S. 2 Year Treasury1.6710.0640.00
US 5-YRU.S. 5 Year Treasury1.730.1040.00
US 10-YRU.S. 10 Year Treasury1.9160.1040.00
US 30-YRU.S. 30 Year Treasury2.3930.0960.00

Oct 31, 2019

Bonds | Treasury Yields Report on October 31, 2019: Treasury yields drop amid doubts over long-term US-China trade deal

Fred Imbert, Silvia Amaro

Treasury yields declined on Thursday as investors loaded up on safer assets amid persisting worries around U.S.-China trade relations.
The benchmark 10-year yield fell to around 11 basis points to 1.68%. The 2-year rate slid by 10 basis points to 1.519%. Yields move inversely to prices.
At around 5 a.m. in New York, Bloomberg News reported Chinese officials have been casting doubt over the possibility of a long-term trade deal with the U.S. The report, which cites unnamed sources, said Chinese officials are concerned about President Donald Trump’s “impulsive nature” and the risk of him backing out of any kind of deal.
Trump later tweeted China and the U.S. were working on an alternative venue to sign phase one of a trade deal which, he said, is “60%” of the overall deal.
Thursday’s moves came after the Federal Reserve on Wednesday cut rates for the third time in 2019. Nonetheless, policymakers signaled that the bank is set to press pause and wait for further data to decide future steps.
The Fed’s Chairman, Jerome Powell, said: “I think we would need to see a really significant move up in inflation that’s persistent before we would consider raising rates to address inflation concerns.”
“Short-term the market will respect the Fed’s posture,” said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities. “But that can change very quickly if we begin to see a more pronounced spillover from the industrial to services/consumer side of the economy. It’s still rough out there.”

Oct 30, 2019

Bonds | Treasury Yields Report: Treasury yields fall after the Fed cuts rates for the third time in 2019

Thomas Franck

U.S. government debt yields slipped on Wednesday after Federal Reserve officials cut rates for a third time in 2019 and said they’d need to see a marked and persistent rise in inflation before hiking borrowing costs in the future.
The yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 1.789%, while the yield on the 30-year Treasury bond was also lower at around 2.263%. The 2-year Treasury yield, more sensitive to changes in central bank policy, fell to 1.622% following the Fed decision.
Though the Fed voted to cut its overnight lending rate by 25 basis points, yields rose slightly after officials suggested in a statement that its third rate cut for 2019 could be followed by a pause in policy adjustments. The Fed will now target the federal funds rate in a range between 1.5% and 1.75%.
“The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate,” the statement said. FOMC members cited weak inflation outlook and global growth concerns in cutting borrowing costs again.
The FOMC removed a key clause that had appeared in post-meeting statements since June, when it began broadcasting that it would “act as appropriate” to sustain economic growth in the U.S. Its removal signaled to some that the series of “mid-cycle adjustments” rate cuts could be put on hold for now.
But Chairman Jerome Powell added later on Wednesday that the central bank would need to see a sustained and significant uptick in price pressures before considering future rate hikes.
“So I think we would need to see a really significant move up in inflation that’s persistent before we would consider raising rates to address inflation concerns.”
Both Kansas City Fed President Esther George and Boston Fed President Eric Rosengren dissented and would have preferred to leave rates unadjusted. St. Louis Fed President James Bullard, who had previously favored steeper rate cuts, did not dissent with the Fed’s October decision.
“I thought the goal of the meeting was to try not to force Powell’s hand to cut and I thought the statement he gave on the offset was down that path ... he said things that were more balanced,” said Jim Schaeffer, deputy chief investment officer at Aegon Asset Management.
“Then I thought he got more hawkish in the meeting, talking about insurance,” Schaeffer added. “But toward the end he seemed to pull it back a little. The bottom line from Powell is not that they aren’t going to cut again, but don’t expect it.”
Since the Fed’s September meeting, the economic situation in the U.S. has proved stable, with softness in retail sales largely balancing multidecade lows in the unemployment rate and modest wage increases. Some have suggested that with trade tensions between the U.S. and China easing, better-than-expected corporate profits and stronger data, the Fed will be anxious to halt its “mid-cycle adjustment” of lowering rates.
The government’s GDP report on Wednesday showed the economy expanded at a 1.9% rate in the third quarter, better than what economists polled by Dow Jones had forecast but still shy of the 2% in the second quarter.


US 3-MOU.S. 3 Month Treasury1.6440.000.00
US 1-YRU.S. 1 Year Treasury1.573-0.0230.00
US 2-YRU.S. 2 Year Treasury1.604-0.0380.00
US 5-YRU.S. 5 Year Treasury1.609-0.050.00
US 10-YRU.S. 10 Year Treasury1.775-0.060.00
US 30-YRU.S. 30 Year Treasury2.256-0.0750.00

Oct 17, 2019

Bonds | Treasury Yields Report: Treasury yields higher after UK and European Union reach new Brexit deal

Thomas Franck

U.S. government debt yields rose Thursday after both U.K. Prime Minister Boris Johnson and the European Union announced a new draft Brexit deal.
Though it remained unclear whether the new accord would clear U.K. Parliament, the apparent success of the last-ditch talks was enough to foster a modest pivot toward riskier assets in both American and European markets.
The yield on the benchmark 10-year Treasury note rose to 1.748% after climbing as high as 1.799% earlier in the session, its highest level since Sept. 19. The yield on the 30-year Treasury bond also rose to a one-month high of 2.272% before moderating its rise to 2.234%. Bond yields rise as prices fall.
The rise in Treasury yields came after reports that the U.K. made concessions over the Irish border in negotiations with the EU, an issue that had proven to be the biggest obstacle to a deal up to that point. The pound was 0.2% higher against the dollar, at $1.2858 after reaching a five-month high in earlier trading.
U.K. Prime Minister Boris Johnson said “we have a great new Brexit deal” via Twitter. He called on British lawmakers to back the deal when it’s put before Parliament on Saturday.
European Commission President Jean-Claude Juncker, meanwhile, called the deal “fair and balanced.”
U.S. corporate earnings have been strong thus far, but trade concerns returned Wednesday as the Wall Street Journal reported that Chinese purchases of U.S. agricultural products may not be as substantial as initially thought, casting doubt over progress in talks between Washington and Beijing.
U.S. Treasury Secretary Steven Mnuchin said Wednesday that trade negotiators from the world’s two largest economies are working to finalize a phase one trade deal draft to be presented to presidents Donald Trump and Xi Jinping.


US 3-MOU.S. 3 Month Treasury1.6740.0050.00
US 1-YRU.S. 1 Year Treasury1.591-0.0030.00
US 2-YRU.S. 2 Year Treasury1.596-0.0040.00
US 5-YRU.S. 5 Year Treasury1.566-0.0110.00
US 10-YRU.S. 10 Year Treasury1.745-0.010.00
US 30-YRU.S. 30 Year Treasury2.231-0.0120.00

Oct 16, 2019

Bonds | Treasury Yields Report: Treasury yields move lower amid US-China trade doubts, economic data

Thomas Franck, Silvia Amaro

Treasury yields inched lower Wednesday as investors began to doubt China’s promises to purchase vast amounts of U.S. farm goods as part of an early accord between Washington and Beijing.
U.S. debt yields slipped as the lack of clarity into the timing and size of China’s agricultural purchases persuaded some on Wall Street that the globe’s two largest economies aren’t much closer to resolving their protracted dispute.
The rate on the benchmark 10-year Treasury note fell to 1.75%, while the yield on the 30-year Treasury bond was little changed at 2.236%. Yields rise as prices fall.
Trade worried festered once again on Wednesday after the Wall Street Journal reported uncertainties remain about how large could be any forthcoming Chinese purchase of U.S. agrarian products.
Though equity markets rallied last week on White House declarations that the two nations had agreed to the first phase of a broader trade deal, the lack of detail has some worried Beijing could eventually renege on its promises.
Meanwhile, Bloomberg News said China wants U.S. tariffs on Chinese goods rolled back before moving forward with the purchases.
Traders are also monitoring news that China will take countermeasures against the United States after the House of Representatives passed the Hong Kong Human Rights and Democracy Act — a bill that asks various U.S. government departments to consider the special trading status of Hong Kong.
U.S. retail sales fell for the first time in seven months in September, sparking fears that the slowdown in manufacturing could be starting to affect the consumer side of the economy.
The Commerce Department said on Wednesday retail sales dropped 0.3% last month as households slashed spending on building materials, online purchases and especially automobiles. The decline was the first since February.
Data for August was revised up to show retail sales gaining 0.6% instead of 0.4% as previously reported. Economists polled by Reuters had forecast retail sales would climb 0.3% in September. Compared to September last year, retail sales increased by 4.1%.


US 3-MOU.S. 3 Month Treasury1.674-0.0030.00
US 1-YRU.S. 1 Year Treasury1.594-0.0520.00
US 2-YRU.S. 2 Year Treasury1.592-0.030.00
US 5-YRU.S. 5 Year Treasury1.567-0.030.00
US 10-YRU.S. 10 Year Treasury1.745-0.0240.00
US 30-YRU.S. 30 Year Treasury2.228-0.0020.00

Oct 1, 2019

Bonds | Treasury Yields Report: Treasury yields sink, erase climb, after manufacturing gauge shows further contraction

Thomas Franck

Government debt yields reversed an early climb after a report on manufacturing activity in the U.S. showed the sector contracted again.
Yields swooned after the Institute for Supply Management showed that manufacturing activity weakened to its lowest level in more than 10 years in September. The ISM said Tuesday its U.S. manufacturing index fell to 47.8 in September, the lowest gauge on activity since June 2009.
That follows an August read of 49.1, when the index contracted for the first time since August 2016. Readings above 50 represent an expansion in manufacturing activity while those under 50 represent a contraction.
The yield on the benchmark 10-year Treasury note reversed a 5-basis-point climb and fell 5 basis points to 1.63%, while the yield on the 30-year Treasury bond sank to 2.097%.
“We have now tariffed our way into a manufacturing recession in the US and globally,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote in a note.
“What’s the strategy now? It better be more than the Chinese buying more soybeans because if it doesn’t include strong provisions on defending US IP, than what was the point of this whole thing,” Boockvar asked.
Yields at first rose on Tuesday after a shortfall in appetite for Tokyo’s debt spurred a broader sell-off in global fixed income, sending yields in Europe and the U.S. higher and prices lower.
Investors pointed to the Bank of Japan’s recent decision to cut its bond buying as well as an announcement that the Government Pension Investment Fund is moving to purchase more foreign debt. The bid-to-cover ratio, an indicator of demand at bond auctions, came in at 3.42, the lowest since 2016.
White House officials on Monday denied reports the Trump administration is considering limiting U.S. investment in China, with trade advisor Peter Navarro telling CNBC Monday that the reports were “fake news.”
The comments have restored some calm for investors, after reports Friday indicated that the White House was in the early stages of weighing restrictions on investment which could go as far as delisting Chinese stocks from U.S. exchanges.
U.S. and Chinese trade officials are due to resume talks this month in a bid to reach a consensus in the protracted dispute between the world’s two largest economies.
Investors are also monitoring an impeachment inquiry into President Trump, with the U.S. House Intelligence Committee seeking access to the president’s calls with Russian President Vladimir Putin and other world leaders, citing national security concerns. The Committee on Monday issued a subpoena to Trump’s personal lawyer, Rudy Giuliani.
On the data front, ISM manufacturing PMI (purchasing managers’ index) figures for September are set for release at 10:00 a.m. ET.

Sep 16, 2019

Bonds | Treasury Yields Report: Treasury yields drop after drone strike in Saudi Arabia sparks bid for safer assets

Thomas Franck

U.S. Treasury yields fell on Monday after drone attacks on Saudi oil production facilities escalated tensions in the Middle East and pushed investors toward safer assets like government debt.
The yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 1.862%, while the yield on the 30-year Treasury bond fell to 2.334%. The 10-year yield had posted its largest weekly rally since November 2016 as fears of an impending economic downturn eased.
Treasury yields rose after drone attacks on Saudi Arabian crude facilities over the weekend, which were estimated to have shut around 5% of the world’s supply.
The attack hit an oil processing facility at Abqaiq and the nearby Khurais oil field, knocking out production of 5.7 million barrels a day, or half of Abqaiq’s daily volume. President Donald Trump in response authorized the release of oil from the Strategic Petroleum Reserve, the nation’s emergency oil reserve, should it be needed to stabilize crude prices.
“Using the reaction of the Treasury market as a proxy it’s obvious that the broader growth implications far outweigh any near-term inflationary impulse,” wrote Ian Lyngen, head of U.S. rate strategy at BMO Capital Markets. “The attacks only reinforce our expectations for the Fed to cut rates a quarter-point on Wednesday and then again in October.
“If anything,” he continued, “the risk that the situation escalates to a protracted military engagement adds to the probability that the Fed isn’t going to be able to stop cutting rates after the aggregate 75 bp of ‘fine tuning’ which is currently priced in.”
Trump said the U.S. was “locked and loaded” and awaiting communication from Saudi Arabia in response to the drone attacks. Yemen’s Houthi rebels claimed responsibility for the attack, but the U.S. has nonetheless suggested that Iran may be responsible for the strike.
The Federal Reserve will begin its next two-day meeting on Tuesday, when members of the Federal Open Market Committee will discuss their economic outlooks and the merits of adjusting interest rates. The officials are widely expected to cut the overnight lending rate by 25 basis points amid a weaker economic situation in Europe and trade tensions between the U.S. and China.

Aug 28, 2019

Bonds | Treasury Yields Report: US 30-year bond yield falls to record low under 2% as global recession fears grow

Thomas Franck

The rate on the benchmark 30-year Treasury bond sank to an all-time low on Wednesday while the U.S. yield curve inverted even further as fixed-income traders grew more confident in forecasts of tepid inflation and slower economic growth.
The 30-year bond yield dropped to as low as 1.907% early Wednesday morning, breaking its prior all-time low of 1.916% clinched earlier in August. The 30-year rate later moved off those lows to trade at 1.943%, still below yields on U.S. debt of far shorter duration such as 3-month and 1-month bills.
The yield curve inversion, meanwhile, continued to worsen on Wednesday. The yield on the benchmark 10-year Treasury note slumped further below that of the 2-year note — at 1.469% and 1.504%, respectively — after closing inverted for the second day in a row on Tuesday. Yields fall as prices rise.

Bond traders consider a 10-year rate below the 2-year yield an notable recession signal, marking an unusual phenomenon as bondholders receive better compensation in the short term. Before August, the last inversion of this part of the yield curve began in December 2005, two years before the financial crisis and subsequent recession.
The spread between the 3-month Treasury yield and that of the 10-year note — the Federal Reserve’s preferred inversion metric — sank to -54.5 basis points, its lowest level since before the financial crisis.
“There’s just a huge Asian bid for any kind of yield,” said Tom di Galoma, head of Treasury trading at Seaport Global Holdings. “It’s kind of my feeling that you just don’t have enough fixed income in the world to actually satisfy the demand. It’s kind of a one-way trade.”
“But my feeling is that interest rates are telling you that there’s some very bad news down the road,” he added. “We don’t know what that is, but that’s what’s being signaled to me.”
Traders across the board have pointed to a deterioration in U.S.-China trade relations as the catalyst for August’s dramatic stock and bond moves, including a 60-basis-point drop in the 10-year Treasury rate. But notwithstanding the latest barbs between the world two largest economies, Treasury demand remains strong and likely symptomatic of traders’ belief in a larger, more malignant downturn in the global economy and a secular decline in inflation.
Lukewarm inflation expectations and the Fed’s perceived inability to goose prices higher have sparked a rash of Treasury buying as traders try to lock in rates they believe will exceed inflation in the long term. Investors tend to sell Treasurys when inflation is high because it erodes the purchasing power of bonds’ fixed payments.
The Fed tries to keep inflation around its 2% target, a pace it feels is both healthy and sustainable for the U.S. economy. But despite historically low interest rates, price gains have remained tame.
The bond market’s inflation expectations are perhaps most evident in the yields on Treasury inflation-protected securities, or TIPS.
TIPS are like other Treasury bonds, but differ in that they’re adjusted for inflation on a regular basis. Therefore, the spread between TIPS rates and those on standard Treasury bonds can be used an approximation for the market’s inflation outlook.

Though the bid for Treasurys began overnight in Asia, geopolitical developments in the United Kingdom pushed both global rates and sterling even lower. U.K. Prime Minister Boris Johnson said he would schedule the formal reopening of parliament for Oct. 14 in a move that would limit legislative time before the country’s Brexit deadline and heighten the odds of a no-deal departure.
For a global investor community already on edge about the direction of economic growth, Johnson’s announcement provided little relief and stoked concerns about the country’s economy if it severs ties with its largest trading partner.
The pound fell by 1% to below the $1.22 mark on Wednesday at 9:00 a.m. London time following Johnson’s comments, but slightly pared losses to trade 0.6% down at $1.2211 by late morning. Other yields followed suit, with the 10-year Italian yield falling below 1% for the first time ever; German and French 10-year rates also fell to record lows.

U.S. Markets Overview: Treasurys chart

US 3-MOU.S. 3 Month Treasury1.992-0.0030.00
US 1-YRU.S. 1 Year Treasury1.753-0.010.00
US 2-YRU.S. 2 Year Treasury1.506-0.0220.00
US 5-YRU.S. 5 Year Treasury1.379-0.0130.00
US 10-YRU.S. 10 Year Treasury1.471-0.0190.00
US 30-YRU.S. 30 Year Treasury1.945-0.0220.00

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