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.

Bonds pared price losses after data showed that inflation remained benign in October.

Excluding the volatile food and energy components, the PCE price index edged up 0.1% last month after being unchanged in September. That lowered the annual increase in the so-called core PCE price index to 1.6% in October from 1.7% in September.

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 1.760%, up from 1.740% late Tuesday.

The Treasury Department sold $32 billion in seven-year notes on Wednesday to strong demand, 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 12:48PM New York / 1748 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

99-197/256

1.6179

0.032

Three-year note US3YT=RR

100-12/256

1.6086

0.030

Five-year note US5YT=RR

99-112/256

1.6177

0.030

Seven-year note US7YT=RR

99-112/256

1.7115

0.029

10-year note US10YT=RR

99-232/256

1.7603

0.020

30-year bond US30YT=RR

104-28/256

2.1873

0.009

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

0.00

-0.75

U.S. 3-year dollar swap spread

-4.00

-0.50

U.S. 5-year dollar swap spread

-5.25

0.75

U.S. 10-year dollar swap spread

-8.50

0.50

U.S. 30-year dollar swap spread

-34.50

0.75

((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.

Latest US Markets Videos

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More