Quantcast

Yields fall after U.S. data, geopolitical risk


Reuters

By Gertrude Chavez-Dreyfuss

NEW YORK, Dec 6 (Reuters) - U.S. Treasury yields fell across the board on Wednesday as risk appetite slid after a sell-off in some foreign equity markets, with further pressure coming from a batch of largely underwhelming U.S. economic data and geopolitical risks.

U.S. President Donald Trump's recognition of Jerusalem as Israel's capital touched off a storm of protest from world leaders, helping boost Treasury prices, analysts said.

Wall Street shares rose on Wednesday, led by a recovery in technology stocks that had been battered in the previous sessions. But U.S. equity gains failed to lift yields as well, as investors pondered non-market factors.

A decline in U.S. unit labor costs in the second and third quarters of this year, suggesting benign inflation pressures, also weighed on Treasury yields, analysts said.

The ADP National Employment Report, which shows private-sector hiring, came out with a slightly higher than expected number of jobs created last month, but analysts have such little faith in the data that it was largely shrugged off.

The ADP report showed U.S. private employers created 190,000 jobs in November, down sharply from the month before and roughly in line with economists' expectations of a gain of 185,000.

"ADP hasn't had a very good track record recently of predicting private nonfarm payrolls, overestimating half of the time and underestimating the other half," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York.

The ADP figures came ahead of the U.S. Labor Department's more comprehensive nonfarm payrolls report on Friday, which includes both public- and private-sector employment.

In late trading, U.S. benchmark 10-year yields were down at 2.329 percent, from 2.356 percent late on Tuesday, while the two-year slid to 1.806 percent, from Tuesday's 1.826 percent.

U.S. 30-year yields, meanwhile, dropped to three-month lows and were last at 2.719 percent, down from 2.732 percent on Tuesday.

"This market is like a junkie, waiting for the next fix," said Bruno Braizinha, interest rates strategist at Societe Generale in New York.

"All the good news seems to have been priced in: the U.S. tax reform, the Federal Reserve hike next month and next year. So now the market is waiting for the next positive thing."

December 6 Wednesday 4:01PMNew York / 2101 GMT

Price

US T BONDS MAR8

154-2/32

0-11/32

10YR TNotes MAR8

124-144/256

0-56/256

Price

Current Yield %

Net Change (bps)

Three-month bills

1.2725

1.2943

-0.021

Six-month bills

1.43

1.4604

-0.024

Two-year note

99-228/256

1.8064

-0.020

Three-year note

99-136/256

1.9146

-0.021

Five-year note

99-110/256

2.1212

-0.030

Seven-year note

99-40/256

2.2563

-0.027

10-year note

99-76/256

2.3296

-0.026

30-year bond

100-156/256

2.7201

-0.012

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

17.50

0.25

U.S. 3-year dollar swap spread

16.25

-0.25

U.S. 5-year dollar swap spread

5.75

0.50

U.S. 10-year dollar swap spread

1.75

0.50

U.S. 30-year dollar swap spread

-20.00

0.25




This article appears in: Stocks , World Markets , Politics


More from Reuters

Subscribe






See Reuters News









Research Brokers before you trade

Want to trade FX?