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Macroeconomic News
TREASURIES-Global growth concerns give bonds a boost
Mon, 2nd Jul 2012 16:05
By Chris Reese
NEW YORK, July 2 (Reuters) - U.S. Treasury debt prices rose
on Monday as
last month added to global growth concerns, stoking an appetite
for lower-risk investments.
Price gains were extended and 30-year bonds traded over a
point higher in price on Monday after data showing the U.S.
manufacturing sector contracted in June for the first time since
July 2009.
'Not only was the headline poor, but it fell below break
even for the first time since the recession. New orders were
well below expectations, suggesting a weak hand off in the
second half of the year,' said Jacob Oubina, senior U.S.
economist at RBC Capital Markets in New York.
'The implication here is a very soft second half of the
year,' he said.
Earlier in the day, Treasuries had firmed following
purchasing managers surveys out of China, Japan, South Korea and
Taiwan showed demand from importing centers such as Europe and
the United States slowed in June.
That took the shine off an agreement by European leaders to
let their rescue fund inject aid directly into stricken banks
from next year and intervene in bond markets to support troubled
members.
Having had the weekend to digest the new measures, some
investors are now questioning whether the rescue fund will have
enough firepower to cool down any selling pressure in the large
Italian and Spanish debt markets. Worries are also growing over
a long implementation process.
Benchmark 10-year Treasury notes were trading
19/32 higher in price to yield 1.58 percent, down from 1.64
percent late Friday.
The Institute for Supply Management said its index of
national factory activity fell to 49.7 from 53.5 the month
before, missing expectations of 52.0, according to a Reuters
poll of economists, and below even the lowest forecast of 50.5.
It was the first time since July 2009 that the index has
fallen below the 50 mark that indicates contraction.
In the wake of the ISM data, 30-year Treasury bonds were trading 1-12/32 higher in price to yield 2.69
percent, down from 2.75 percent late Friday.
(Additional reporting by Julie Haviv)
((chris.reese@thomsonreuters.com)(+1 646 223
6073)(chris.reese.reuters.com@reuters.net))
(-------MARKET SNAPSHOT AT 10:35 a.m. EDT (1435 GMT)------- Sept T-Bond 149-18/32(+1-19/32) Sept 10-Year note 134-03/32 (+23/32) Change vs Current Nyk yield Three-month bills 0.09 (+0.01) 0.091 Six-month bills 0.155 (+0.00) 0.157 Two-year note 99-29/32 (+01/32) 0.297 Five-year note 100-13/32 (+08/32) 0.666 10-year note 101-18/32 (+19/32) 1.578 30-year bond 106-13/32(+1-14/32) 2.687 DOLLAR SWAP SPREADS LAST Change U.S. 2-year dollar swap spread 25.75 (+1.75) U.S. 3-year dollar swap spread 24.50 (+1.50) U.S. 5-year dollar swap spread 26.25 (+2.00) U.S. 10-year dollar swap spread 14.25 (+1.75) U.S. 30-year dollar swap spread -24.25 (+1.25))
COPYRIGHT
Copyright Thomson Reuters 2012. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, July 2 (Reuters) - U.S. Treasury debt prices rose
on Monday as
data showing unexpectedly weak U.S. manufacturing
last month added to global growth concerns, stoking an appetite
for lower-risk investments.
Price gains were extended and 30-year bonds traded over a
point higher in price on Monday after data showing the U.S.
manufacturing sector contracted in June for the first time since
July 2009.
'Not only was the headline poor, but it fell below break
even for the first time since the recession. New orders were
well below expectations, suggesting a weak hand off in the
second half of the year,' said Jacob Oubina, senior U.S.
economist at RBC Capital Markets in New York.
'The implication here is a very soft second half of the
year,' he said.
Earlier in the day, Treasuries had firmed following
purchasing managers surveys out of China, Japan, South Korea and
Taiwan showed demand from importing centers such as Europe and
the United States slowed in June.
That took the shine off an agreement by European leaders to
let their rescue fund inject aid directly into stricken banks
from next year and intervene in bond markets to support troubled
members.
Having had the weekend to digest the new measures, some
investors are now questioning whether the rescue fund will have
enough firepower to cool down any selling pressure in the large
Italian and Spanish debt markets. Worries are also growing over
a long implementation process.
Benchmark 10-year Treasury notes were trading
19/32 higher in price to yield 1.58 percent, down from 1.64
percent late Friday.
The Institute for Supply Management said its index of
national factory activity fell to 49.7 from 53.5 the month
before, missing expectations of 52.0, according to a Reuters
poll of economists, and below even the lowest forecast of 50.5.
It was the first time since July 2009 that the index has
fallen below the 50 mark that indicates contraction.
In the wake of the ISM data, 30-year Treasury bonds were trading 1-12/32 higher in price to yield 2.69
percent, down from 2.75 percent late Friday.
(Additional reporting by Julie Haviv)
((chris.reese@thomsonreuters.com)(+1 646 223
6073)(chris.reese.reuters.com@reuters.net))
(-------MARKET SNAPSHOT AT 10:35 a.m. EDT (1435 GMT)------- Sept T-Bond 149-18/32(+1-19/32) Sept 10-Year note 134-03/32 (+23/32) Change vs Current Nyk yield Three-month bills 0.09 (+0.01) 0.091 Six-month bills 0.155 (+0.00) 0.157 Two-year note 99-29/32 (+01/32) 0.297 Five-year note 100-13/32 (+08/32) 0.666 10-year note 101-18/32 (+19/32) 1.578 30-year bond 106-13/32(+1-14/32) 2.687 DOLLAR SWAP SPREADS LAST Change U.S. 2-year dollar swap spread 25.75 (+1.75) U.S. 3-year dollar swap spread 24.50 (+1.50) U.S. 5-year dollar swap spread 26.25 (+2.00) U.S. 10-year dollar swap spread 14.25 (+1.75) U.S. 30-year dollar swap spread -24.25 (+1.25))
COPYRIGHT
Copyright Thomson Reuters 2012. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
