Yields slide after weak global manufacturing data

* Weak global PMIs hurt U.S. yields
* U.S. retail sales beat expectations
* U.S. jobless claims drop to lowest since 1969

(Adds new comment, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, April 18 (Reuters) - 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.
Prior to Thursday's decline, U.S. yields tracked four-week
highs, rising in four of the last six sessions. Treasury yields
overall have been supported by generally solid U.S. data that
suggested the economy is in far better shape than expected.
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 Net
Yield Change
(pct) (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 9.75 0.00
spread
U.S. 3-year dollar swap 6.50 0.00
spread
U.S. 5-year dollar swap 3.25 -0.25
spread
U.S. 10-year dollar swap -1.25 -0.25
spread
U.S. 30-year dollar swap -23.00 0.25
spread

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Richard Leong; Editing by Bernadette Baum and Chizu Nomiyama)


2019-04-18 20:14:23

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