US Markets

Yields rise on strong capital goods orders

Credit: REUTERS/THOMAS WHITE

U.S. Treasury yields rose on Wednesday after data showed that new orders for key U.S.-made capital goods increased by the most in nine months in October, boosting confidence that the U.S. economy is solid.

By Karen Brettell

NEW YORK, Nov 27 (Reuters) - U.S. Treasury yields rose on Wednesday after data showed that new orders for key U.S.-made capital goods increased by the most in nine months in October, boosting confidence that the U.S. economy is solid.

The Commerce Department said on Wednesday orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, surged 1.2% last month, the largest gain since January.

These so-called core capital goods orders were boosted by increased demand for machinery, computers and electronic products, and fabricated metals.

“The numbers certainly surprised to the upside ... there’s been a lot of concern about weak investment,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.

However, “the problem is this is one of the most volatile data series we have in the main U.S. data release calendar, so it is difficult to read into it,” Goldberg said.

Risk appetite also improved after U.S. President Trump said on Tuesday that the United States and China are close to agreement on the first phase of a trade deal, reducing demand for safe haven U.S. government bonds.

Benchmark 10-year note yields US10YT=RR were last at 1.767%, up from 1.740% late Tuesday.

The Treasury Department will sell $32 billion in seven-year notes on Wednesday, the final sale of $113 billion in coupon-bearing supply this week.

A $40 billion sale of two-year notes on Monday and a $41 billion sale of five-year notes on Tuesday were marked by solid demand.

The bond market will be closed on Thursday for the Thanksgiving Day holiday.

November 27 Wednesday 9:08AM New York / 1408 GMT

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

1.59

1.6185

0.013

Six-month bills US6MT=RR

1.5875

1.6269

0.008

Two-year note US2YT=RR

99-201/256

1.6098

0.024

Three-year note US3YT=RR

100-14/256

1.6059

0.027

Five-year note US5YT=RR

99-110/256

1.6193

0.031

Seven-year note US7YT=RR

99-108/256

1.7139

0.031

10-year note US10YT=RR

99-216/256

1.7671

0.027

30-year bond US30YT=RR

103-212/256

2.1998

0.022

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

0.75

0.00

U.S. 3-year dollar swap spread

-3.50

0.00

U.S. 5-year dollar swap spread

-5.25

0.75

U.S. 10-year dollar swap spread

-8.75

0.25

U.S. 30-year dollar swap spread

-35.00

0.25

((karen.brettell@thomsonreuters.com; 646-223-6274))

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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