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U.S. bond yields slip on trade jitters, CPI miss


Reuters


By Richard Leong

NEW YORK, May 10 (Reuters) - U.S. Treasury yields dipped on Friday, with longer-dated yields hovering at five-week lows on demand for low-risk bonds spurred by worries about trade tension between China and the United States and data that showed domestic inflation remains tame.

The United States escalated a tariff war with China on Friday by raising duties on $200 billion worth of Chinese goods amid last-ditch talks to rescue a trade deal, as U.S. President Donald Trump signaled that talks could drag on beyond this week.

The pace of Treasury purchases slowed on Friday as investors assessed the impact from the latest round of U.S. tariffs and possible Chinese retaliation, analysts said.

"Now past the shock that trade negotiations are no longer on schedule, investors will have to rely on private economists to develop new forecasts of the economic impact of tariffs or new goals for U.S.-China trade," said Jim Vogel, interest rates strategist at FTN Financial in Memphis, Tennessee.

At 9:37 a.m. (1337 GMT), benchmark 10-year Treasury yields were down 0.4 basis point at 2.4529%. They fell to a five-week low at 2.424% on Thursday.

On the week, 10-year yields were on track to fall 8 basis points, the steepest drop in seven weeks.

Adding to downward pressure on yields on Friday was a mildly weaker-than-forecast report on U.S. consumer prices.

The government's consumer price index increased 0.3% in April, less than the 0.4% increase forecast by analysts polled by Reuters.

The latest CPI reading reinforced the notion that the Federal Reserve would leave key lending rates unchanged this year, although the futures market still implied traders expect a 60% chance of a rate cut at the end of the year.

"For the Fed, the disappointment in the April CPI report is not likely to materially change the clear majority view that some significant part of recent soft inflation numbers is transitory," TD Securities analysts wrote in a research note.

May 10 Friday 9:27AMNew York / 1327 GMT

Price

US T BONDS JUN9

148-25/32

3/32

10YR TNotes JUN9

124-12/256

2/32

Price

Current Yield %

Net Change (bps)

Three-month bills

2.375

2.4219

-0.012

Six-month bills

2.375

2.4366

-0.012

Two-year note

100

2.2498

-0.018

Three-year note

99-192/256

2.2116

-0.013

Five-year note

100-12/256

2.2399

-0.013

Seven-year note

100-60/256

2.3383

-0.010

10-year note

99-88/256

2.4494

-0.008

30-year bond

100-8/256

2.8734

-0.008

YIELD CURVE

Last (bps)

Net Change (bps)

10-year vs 2-year yield

19.80

1.45

30-year vs 5-year yield

63.20

1.75

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

9.50

0.00

U.S. 3-year dollar swap spread

6.75

-0.25

U.S. 5-year dollar swap spread

3.75

0.25

U.S. 10-year dollar swap spread

-2.25

0.00

U.S. 30-year dollar swap spread

-26.25

-0.25






This article appears in: Politics , Stocks , World Markets , Economy
Referenced Symbols: TLT




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