Stocks

Yields slide after weak global manufacturing data

Reuters

By Gertrude Chavez-Dreyfuss

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

Volume thinned in the afternoon ahead of a long weekend, with financial markets closing for the Good Friday holiday.

For instance, 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.

However, U.S. retail sales were offset by sluggish French and German surveys of purchasing managers in the manufacturing sector for April, which showed contraction in activity.

"The U.S. data were really strong. The retail sales report was great, but they seem to be focused on the fact that the data are struggling out of Europe," said Mary Anne Hurley, vice president of fixed income trading at D.A. Davidson in Seattle. "The problem in Europe would likely keep the Fed (Federal Reserve) on hold."

The soft numbers 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.

In early afternoon trading, U.S. 10-year note yields fell to 2.563% , from Wednesday's level of 2.592%.

Yields on U.S. 30-year bonds were also lower at 2.961% , down from 2.992% on Wednesday.

U.S. 2-year yields slipped to 2.384% , down from 2.402% late on Wednesday.

Andrew Hunter, senior U.S. economist at Capital Economics in London, said the retail sales figures provided some comfort that "the economy isn't falling off a cliff."

"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.

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.

Thursday, April 18, at 1358 EDT (1758 GMT):

Price Current Yield (pct) Net Change (bps)
Three-month bills 2.375 2.4219 -0.017
Six-month bills 2.395 2.4641 -0.003
Two-year note 99-192/256 2.3823 -0.020
Three-year note 99-182/256 2.3509 -0.024
Five-year note 98-216/256 2.3743 -0.027
Seven-year note 98-160/256 2.4667 -0.029
10-year note 100-136/256 2.5632 -0.029
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 9.75 0.00
U.S. 3-year dollar swap spread 6.50 0.00
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 -23.00 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.

Reuters

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