U.S. yields hit 3-week highs as China data stokes risk appetite


By Gertrude Chavez-Dreyfuss

NEW YORK, April 12 () - U.S. Treasury yields rose to three-week highs on Friday as risk appetite increased after data showed Chinese exports rebounded in March, easing concerns about slowing global growth.

"This move in yields is driven largely by stronger data out of China overnight," said Bill Merz, head of fixed income research at U.S. Bank Wealth Management in Minneapolis.

U.S. yields have risen for two straight sessions on both the long and short end, fueled as well by generally solid U.S. economic data this week.

Friday's reports were upbeat overall with U.S. import prices beating expectations and U.S. consumer sentiment stabilizing, with yields holding their gains.

"This print (U.S. consumer confidence) simply confirms that consumer confidence is stabilizing at a strong but lower plateau," said Jon Hill, interest rates strategist, at BMO Capital Markets in New York. "This makes sense given ongoing strength in the labor market, near record levels in equities."

U.S. data for 2019 so far paints a picture of an economy that is not likely to go into recession, contrary to signals from the rates market that the Federal Reserve may have to ease monetary policy soon.

"Bottomline, the market is pricing in half a rate cut this year and about one cut next year. That has moderated from extreme levels recently. But the current U.S. economic data doesn't really support that," U.S. Bank's Merz said.

In mid-morning trading, U.S. 10-year note yields were higher, at 2.545% , up from 2.504% late on Thursday.

Yields on U.S. 30-year bonds were also higher, at 2.961% , up from 2.937% on Thursday.

On the short end of the curve, U.S. 2-year yields edged up to 2.385%, compared with Thursday's 2.356% .

All three maturities hit three-week peaks on Friday.

"For now, we expect continued upward pressure on bond yields," Merz said.

U.S. yields also moved in line with the European bond market, with 10-year German bind yields rising to three-week highs .

April 12 Friday 10:49AMNew York / 1449 GMT

Price Current Yield % Net Change (bps)
Three-month bills 2.38 2.427 -0.002
Six-month bills 2.395 2.4574 -0.002
Two-year note 99-190/256 2.3852 0.029
Three-year note 99-184/256 2.3476 0.041
Five-year note 98-230/256 2.3616 0.048
Seven-year note 98-184/256 2.4513 0.046
10-year note 100-184/256 2.5417 0.038
30-year bond 100-200/256 2.9603 0.023
Last (bps) Net Change (bps)
U.S. 2-year dollar swap spread 9.75 1.00
U.S. 3-year dollar swap spread 6.50 0.75
U.S. 5-year dollar swap spread 2.75 -0.25
U.S. 10-year dollar swap spread -2.00 -0.25
U.S. 30-year dollar swap spread -25.25 0.25

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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