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Yields fall after weak global manufacturing data


Reuters


By Gertrude Chavez-Dreyfuss

NEW YORK, April 18 (Reuters) - U.S. Treasury yields fell on Thursday, undermined by weak manufacturing surveys around the world that boosted concerns about a global slowdown.

Prior to Thursday's decline, U.S. yields tracked four-week highs, rising in four of the last six sessions. Treasury yields overall have been supported by generally solid U.S. data that suggested the economy is in far better shape than expected.

The soft data out of Europe came after a report on Japanese manufacturing activity which showed new export orders fell at the fastest pace in almost three years.

"There is no springtime for EU manufacturing in April, according to this morning's PMI (purchasing managers' index)," said Jim Vogel, interest rates strategist at FTN Financial in Memphis, Tennessee. "Tremendous buying in fixed income in reaction to the numbers."

U.S. yields, however, edged off their lows after U.S. retail sales data in March overwhelmingly beat expectations, easing concerns about a potential economic slowdown.

U.S. retail sales last month rose 1.6%, handily exceeding forecasts of a 0.9% gain. The number was also a steep turnaround from February's 0.2% fall.

"Overall, the retail sales figures add to the slightly more positive tone of the recent data and provide some comfort that the economy isn't falling off a cliff," said Andrew Hunter, senior U.S. economist, at Capital Economics in London.

"But they don't change our view that the fading of the fiscal boost and the lagged impact of the Fed's monetary tightening will push GDP growth below its 2 percent potential pace over the coming quarters," he added.

In mid-morning trading, U.S. 10-year note yields fell to 2.552% , from Wednesday's level of 2.592%.

Yields on U.S. 30-year bonds were also lower at 2.963% , down from 2.992% on Wednesday.

U.S. 2-year yields slipped to 2.378% , down from 2.402% late on Wednesday.

A separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 192,000 for the week ended April 13, the lowest since September 1969. Claims have now declined for five straight weeks.

April 18 Thursday 9:59AMNew York / 1359 GMT

Price

Current Yield %

Net Change (bps)

Three-month bills

2.38

2.427

-0.012

Six-month bills

2.3925

2.4615

-0.006

Two-year note

99-194/256

2.3781

-0.024

Three-year note

99-186/256

2.3454

-0.030

Five-year note

98-230/256

2.3624

-0.039

Seven-year note

98-180/256

2.4543

-0.042

10-year note

100-160/256

2.5524

-0.040

30-year bond

100-188/256

2.9626

-0.029

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

9.50

-0.25

U.S. 3-year dollar swap spread

6.25

-0.25

U.S. 5-year dollar swap spread

3.25

-0.25

U.S. 10-year dollar swap spread

-1.25

-0.25

U.S. 30-year dollar swap spread

-23.25

0.00






This article appears in: Stocks , World Markets , Politics




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