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TREASURIES-Yields flat to slightly higher in thin trading


Reuters

By Gertrude Chavez-DreyfussNEW YORK, July 17 (Reuters) - U.S. Treasury yields were
little changed to slightly higher on Monday, trading in narrow
ranges, after a fairly volatile week highlighted by soft U.S.
inflation and retail sales data, with investors unsure about the
market's direction.
    "We're still trading off the weak inflation and retail sales
data from Friday, although the market is trying to figure what
to do next," said Gennadiy Goldberg, interest rates strategist,
at TD Securities in New York.
    "I'm not quite sure whether the sell-off in Treasuries is
over. Unfortunately, there is not enough this week to offer any
form of signal for the market," he added.
    Yields, which move inversely to prices, tumbled to
multi-week lows Friday as a round of weak U.S. data dimmed
expectations for an interest rate hike in December.
    FTN Financial's chief economist Chris Low in a recent
research note pointed out that Friday's poor data argued
strongly for a pause in Federal Reserve rate hikes, and the Fed
was due to hold anyway as it begins reducing its massive balance
sheet.
    "There are five months of data before the December meeting,
plenty of time to reveal whether a six-month wait is long
enough," Low said.
    The market was also focused on this week's heavy calendar of
U.S. corporate bond issuance, especially after the end of the
earnings reporting season, analysts said, with corporates keen
to lock in Treasury rates.
    Action Economics said many financials will exit their
blackout periods and are expected to lead corporate bond
issuance. Those expected to issue bonds include JP Morgan Chase,
Wells Fargo, and Jefferies Finance, the research firm said.
    "There is a little bit of rate-locking going on and that
pushes prices lower a little bit," TD's Goldberg said.
    Treasuries tend to sell off when corporates enter into
rate-lock agreements.
    In late morning trading, U.S. 10-year yields rose to 2.328
percent <US10YT=RR>, from 2.319 percent late on Friday.
    U.S. 30-year bonds were down 1/32 in price, yielding 2.913
percent <US30YT=RR>, from 2.910 percent Friday.
    U.S. two-year yields were up at 1.363 percent <US2YT=RR>,
from Friday's 1.356 percent.
    The weaker-than-expected New York State manufacturing index
fell in July to 9.8, compared with a forecast of 15, had little
impact, but it did keep yields near their lows for the day.
[nN9N1IS015]

 (Editing by Bernadette Baum)
 ((gertrude.chavez@thomsonreuters.com; 646-223-6322; Reuters
Messaging: rm://gertrude.chavez.reuters.com@reuters.net))

Keywords: USA BONDS/



This article appears in: Politics , Fundamental Analysis , Stocks , World Markets , Economy , Bonds


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