TREASURIES-U.S. yields edge higher on trade optimism
By Gertrude Chavez-Dreyfuss NEW YORK, Dec 10 (Reuters) - U.S. Treasury yields rose on Tuesday after trading lower for most of the overnight session, as risk appetite improved amid optimism that the Trump administration could delay imposing tariffs on Chinese goods set to take effect on Sunday. This is viewed as a positive development for ongoing U.S.-China trade negotiations, as both sides try to forge a preliminary agreement. The U.S. government's tariffs on about $160 billion in Chinese goods are set to be applied on Dec 15. A Wall Street Journal report earlier on Tuesday said U.S. and Chinese trade negotiations are planning for a delay of the imposition of tariffs. The report sent U.S. stocks and Treasury yields higher. "The headline on the possible delay of tariffs caused a bounce in yields," said Michael Chang, interest rates strategist at Societe Generale in New York. "Basically 10-year yields are in the 1.8% range and they're hinged on trade talks." Acting White House Chief of Staff Mick Mulvaney also added to positive trade expectations on Tuesday, saying the prospects for the first part of a U.S. trade deal with China look good. In morning trading, U.S. 10-year note yields rose to 1.839%, from 1.831% late on Monday. Yields on 30-year bonds were up at 2.268%, from 2.265% on Monday. On the short-end of the curve, U.S. two-year yields advanced as well to 1.645%, from Monday's 1.627%. The decline in U.S. Treasury prices also helped traders prepare for the auction of $24 billion in 10-year notes later on Tuesday. Ahead of an auction, traders typically sell Treasuries to push the yield higher so they can buy them at a lower price. Also on Tuesday, the Federal Reserve started its two-day meeting, but market participants do not expect fireworks from the statement. The U.S. central bank is widely expected to hold interest rates steady after cutting them three times this year. December 10 Tuesday 10:27 AM New York / 1527 GMT Price Current Net Yield % Change (bps) Three-month bills 1.5325 1.5642 0.008 Six-month bills 1.53 1.5676 0.006 Two-year note 99-186/256 1.6415 0.015 Three-year note 99-236/256 1.6518 0.013 Five-year note 99-36/256 1.6809 0.013 Seven-year note 98-252/256 1.7806 0.013 10-year note 99-48/256 1.8399 0.009 30-year bond 102-92/256 2.266 0.001 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 0.75 -0.25 spread U.S. 3-year dollar swap -2.25 0.50 spread U.S. 5-year dollar swap -3.25 -0.25 spread U.S. 10-year dollar swap -7.25 -0.25 spread U.S. 30-year dollar swap -32.75 0.25 spread (Reporting by Gertrude Chavez-Dreyfuss Editing by Nick Zieminski)
