Yields tick higher as Fed hike, jobs report loom in week ahead

Yields tick higher as Fed hike, jobs report loom in week ahead

30 Jan    Finance News, PMN Business, REU

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NEW YORK — U.S. Treasury yields edged

higher on Monday at the start of a busy week of economic data

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and a widely anticipated interest rate hike by the Federal

Reserve.

Investors have priced in a near-certainty that the Fed would

raise benchmark rates by 25 basis points at the end of its

meeting on Wednesday, the smallest increase since the central

bank began its rate-hike cycle 10 months ago.

Economic data scheduled to be released this week, which

includes readings on consumer confidence, construction spending,

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and unemployment, are expected to factor into whether the Fed

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will conclude its rate hikes in March.

“We anticipate the price action itself will be the most

relevant takeaway from the session as investors seek to

setup for this week’s array of fundamental and policy

developments,” said Ian Lyngen, head of U.S. Rates Strategy at

BMO Capital Markets.

The yield on 10-year Treasury notes was up

3.5 basis points to 3.553%, bringing it close to its highest

level since Jan. 11.

The yield on the 30-year Treasury bond was up

2.8 basis points to 3.662%.

Rising concerns about the possibility of a default if

Congress does not raise the debt ceiling helped propel greater

demand for 6-month bills than for 3-month bills in separate

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auctions held Monday, said Thomas Simons, money market economist

at Jefferies LLC.

“It is possible that the buyside is steering clear of

the 3-month because of an expected paydown in bills that will be

ongoing when this bill matures,” he said.

A closely watched part of the U.S. Treasury yield curve

measuring the gap between yields on two- and 10-year Treasury

notes, seen as an indicator of economic

expectations, was at -70.6 basis points.

The two-year U.S. Treasury yield, which

typically moves in step with interest rate expectations, was up

5 basis points at 4.257%.

January 30 Monday 1:21PM New York / 1821 GMT

Price Current Net

Yield % Change

(bps)

Three-month bills 4.5525 4.6665 -0.010

Six-month bills 4.63 4.8037 -0.035

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Two-year note 99-193/256 4.2547 0.048

Three-year note 99-194/256 3.9621 0.054

Five-year note 99-48/256 3.6794 0.058

Seven-year note 99-60/256 3.6248 0.046

10-year note 104-176/256 3.5532 0.035

20-year bond 102-224/256 3.7918 0.027

30-year bond 106-24/256 3.662 0.028

DOLLAR SWAP SPREADS

Last (bps) Net

Change

(bps)

U.S. 2-year dollar swap 27.75 -0.25

spread

U.S. 3-year dollar swap 14.75 0.50

spread

U.S. 5-year dollar swap 5.75 -0.25

spread

U.S. 10-year dollar swap -2.00 0.25

spread

U.S. 30-year dollar swap -37.50 0.00

spread

(Reporting by David Randall; Editing by Arun Koyyur and Andrea

Ricci)

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