Treasury Yields Up Ahead of Michigan Data
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Treasury Yields Up Ahead of Michigan Data
Treasury Yields Up Ahead of Michigan Data
Friday, July 18, 2003 6:14 a.m. ET
By George Matlock
LONDON (Reuters) - U.S. Treasury yields rose in thin London trading on Friday, with a growing perception that the U.S. economy is in recovery mode pressuring bond prices ahead of a key consumer sentiment survey this session.
Treasury yields were pushed sharply higher on Thursday after a string of upbeat economic numbers. Dealers eyed the preliminary data from the University of Michigan consumer sentiment index at 9:45 a.m. EDT for further signs of recovery.
A Reuter poll of economists forecast the index at 90.0 in July, a nudge improved from 89.7 in June.
"The number could well be stronger than that, but the market has now priced in a recovery, so I don't expect a leap in bond yields," said Alan Wilde, director of fixed income at Abbey National Asset Managers in Glasgow.
At 5:44 a.m. EDT, the two-year notes were yielding 1.45 percent <US2YT=RR>, up one basis point from late New York levels on Thursday.
The 10-year note <US10YT=RR> yielded 3.95 percent, about 2.7 basis points higher from Thursday's close and compared to near four-month peaks hit this week around 4.09 percent.
"The 10-year yield has already risen substantially in the past month as recovery expectations gained prominence, so we will probably work around a four percent yield later today," Wilde added. "Not dissimilar to current levels."
The 10-year yield marked a 45-year lows at 3.0749 percent on June 16.
The 10-year September T-Note future <TYU3> was up 1/64 at 114 22/32.
"We have the confidence numbers this afternoon but there is not a lot of data in coming days so the market should settle down given the volatility of recent days," said a London trader.
Wall Street ticker futures gained slightly on Friday <NDU3><DJU3>, suggesting U.S. equities would head higher.
"There have been huge volumes this week and things tend to quieten down on a Friday," he added.
On Tuesday, Federal Reserve Chairman Alan Greenspan upset bond markets, leading 10-year Treasuries to suffer their biggest one-day sell-off in months, when he sounded upbeat about the U.S. economy in a Congressional testimony to the House Financial Services Committee.
On Wednesday, he appeared to back-pedal just enough to soothe bond markets telling the Senate Banking Committee he would not rule out using extraordinary rate cut measures if they became necessary.
U.S. Treasuries were steady against German Bunds, with the 10-year yield spread unchanged since Thursday, with German debt yielding four basis points more than T-Notes.
The 10-year dollar swap spread stood at 36 basis points compared with 38-1/2 in the United States on Thursday.
Copyright © 2003 Reuters Limited.
Friday, July 18, 2003 6:14 a.m. ET
By George Matlock
LONDON (Reuters) - U.S. Treasury yields rose in thin London trading on Friday, with a growing perception that the U.S. economy is in recovery mode pressuring bond prices ahead of a key consumer sentiment survey this session.
Treasury yields were pushed sharply higher on Thursday after a string of upbeat economic numbers. Dealers eyed the preliminary data from the University of Michigan consumer sentiment index at 9:45 a.m. EDT for further signs of recovery.
A Reuter poll of economists forecast the index at 90.0 in July, a nudge improved from 89.7 in June.
"The number could well be stronger than that, but the market has now priced in a recovery, so I don't expect a leap in bond yields," said Alan Wilde, director of fixed income at Abbey National Asset Managers in Glasgow.
At 5:44 a.m. EDT, the two-year notes were yielding 1.45 percent <US2YT=RR>, up one basis point from late New York levels on Thursday.
The 10-year note <US10YT=RR> yielded 3.95 percent, about 2.7 basis points higher from Thursday's close and compared to near four-month peaks hit this week around 4.09 percent.
"The 10-year yield has already risen substantially in the past month as recovery expectations gained prominence, so we will probably work around a four percent yield later today," Wilde added. "Not dissimilar to current levels."
The 10-year yield marked a 45-year lows at 3.0749 percent on June 16.
The 10-year September T-Note future <TYU3> was up 1/64 at 114 22/32.
"We have the confidence numbers this afternoon but there is not a lot of data in coming days so the market should settle down given the volatility of recent days," said a London trader.
Wall Street ticker futures gained slightly on Friday <NDU3><DJU3>, suggesting U.S. equities would head higher.
"There have been huge volumes this week and things tend to quieten down on a Friday," he added.
On Tuesday, Federal Reserve Chairman Alan Greenspan upset bond markets, leading 10-year Treasuries to suffer their biggest one-day sell-off in months, when he sounded upbeat about the U.S. economy in a Congressional testimony to the House Financial Services Committee.
On Wednesday, he appeared to back-pedal just enough to soothe bond markets telling the Senate Banking Committee he would not rule out using extraordinary rate cut measures if they became necessary.
U.S. Treasuries were steady against German Bunds, with the 10-year yield spread unchanged since Thursday, with German debt yielding four basis points more than T-Notes.
The 10-year dollar swap spread stood at 36 basis points compared with 38-1/2 in the United States on Thursday.
Copyright © 2003 Reuters Limited.
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