Treasury yields fall as Chinese data disappoints; traders look ahead to Fed meeting

U.S. government debt prices rose on Friday as traders digested fresh economic data out of China and looked ahead to next week’s Federal Reserve meeting. The yield on the benchmark 10-year Treasury note fell steeply to 2.875 percent, while the yield on the 30-year Treasury bond dropped to 3.136 percent. Bond yields move inversely to prices. Investors turned their attention to worse-than-expected Chinese data. News of the disappointing figures comes as China and the U.S. try to negotiate a trade d


U.S. government debt prices rose on Friday as traders digested fresh economic data out of China and looked ahead to next week’s Federal Reserve meeting. The yield on the benchmark 10-year Treasury note fell steeply to 2.875 percent, while the yield on the 30-year Treasury bond dropped to 3.136 percent. Bond yields move inversely to prices. Investors turned their attention to worse-than-expected Chinese data. News of the disappointing figures comes as China and the U.S. try to negotiate a trade d
Treasury yields fall as Chinese data disappoints; traders look ahead to Fed meeting Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-12-14  Authors: ryan browne, bryan r smith, afp, getty images
Keywords: news, cnbc, companies, treasury, chinese, look, data, fall, worsethanexpected, yields, meeting, traders, rose, bond, widen, disappoints, fed, yield, china, trade


Treasury yields fall as Chinese data disappoints; traders look ahead to Fed meeting

U.S. government debt prices rose on Friday as traders digested fresh economic data out of China and looked ahead to next week’s Federal Reserve meeting.

The yield on the benchmark 10-year Treasury note fell steeply to 2.875 percent, while the yield on the 30-year Treasury bond dropped to 3.136 percent. Bond yields move inversely to prices.

Investors turned their attention to worse-than-expected Chinese data. The country’s industrial output in November grew 5.4 percent from the previous year, less than the 5.9 percent estimated by Reuters; retail sales, meanwhile, rose 8.1 percent last month, falling short of an expected 8.8 percent.

News of the disappointing figures comes as China and the U.S. try to negotiate a trade deal within a 90-day tariffs truce. Positive headlines around trade relations between the two had buoyed market sentiment earlier this week.

President Donald Trump said discussions with Beijing had been “very productive” and that some “important announcements” were forthcoming, while a Wall Street Journal report said China was preparing to widen foreign access to its economy.


Company: cnbc, Activity: cnbc, Date: 2018-12-14  Authors: ryan browne, bryan r smith, afp, getty images
Keywords: news, cnbc, companies, treasury, chinese, look, data, fall, worsethanexpected, yields, meeting, traders, rose, bond, widen, disappoints, fed, yield, china, trade


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US Treasury yields move higher amid fears of an economic slowdown

ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was higher at around 2.8611 percent, while the yield on the 30-year Treasury bond was also higher at 3.1450 percent. Investors are increasingly concerned about a possible economic slowdown, shortly after the U.S., China and Japan all reported weaker-than-expected economic data. Meanwhile, the U.S. Treasury is set to auction $39 billion in 13-week bills and $36 billion in 26-week bills on Monday. In energy marke


ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was higher at around 2.8611 percent, while the yield on the 30-year Treasury bond was also higher at 3.1450 percent. Investors are increasingly concerned about a possible economic slowdown, shortly after the U.S., China and Japan all reported weaker-than-expected economic data. Meanwhile, the U.S. Treasury is set to auction $39 billion in 13-week bills and $36 billion in 26-week bills on Monday. In energy marke
US Treasury yields move higher amid fears of an economic slowdown Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-12-10  Authors: sam meredith
Keywords: news, cnbc, companies, lower, yields, economic, fears, higher, bills, price, data, slowdown, crude, yield, amid, treasury, billion


US Treasury yields move higher amid fears of an economic slowdown

At around 5 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was higher at around 2.8611 percent, while the yield on the 30-year Treasury bond was also higher at 3.1450 percent.

Investors are increasingly concerned about a possible economic slowdown, shortly after the U.S., China and Japan all reported weaker-than-expected economic data. It comes after Wall Street’s main indexes closed more than 2 percent lower on Friday, registering their largest weekly percentage declines since March.

On the data front, investors are likely to closely monitor the release of October’s Job Openings and Labor Turnover Survey (JOLTS) at around 10 a.m. ET.

Meanwhile, the U.S. Treasury is set to auction $39 billion in 13-week bills and $36 billion in 26-week bills on Monday.

In energy markets, crude prices were mixed after OPEC and allied non-OPEC oil producers agreed to implement a supply cut from January. Despite the news, the price outlook for 2019 remains uncertain on the back of an economic slowdown.

International benchmark Brent crude traded at around $61.66 on Monday, up around 0.05 percent, while U.S. West Texas Intermediate (WTI) stood at around $52.40, more than 0.4 percent lower.


Company: cnbc, Activity: cnbc, Date: 2018-12-10  Authors: sam meredith
Keywords: news, cnbc, companies, lower, yields, economic, fears, higher, bills, price, data, slowdown, crude, yield, amid, treasury, billion


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Steven Mnuchin under consideration to be next Trump chief of staff

Treasury Secretary Steven Mnuchin is one of the advisors to President Donald Trump under consideration to be the next White House chief of staff, according to two people with direct knowledge of the matter. It’s unclear whether Trump himself has spoken with Mnuchin about becoming his next chief of staff. Mnuchin’s potential move to chief of staff would come amid crucial trade talks with China. The New York Times had reported that Mnuchin was a possible contender for the chief of staff job. White


Treasury Secretary Steven Mnuchin is one of the advisors to President Donald Trump under consideration to be the next White House chief of staff, according to two people with direct knowledge of the matter. It’s unclear whether Trump himself has spoken with Mnuchin about becoming his next chief of staff. Mnuchin’s potential move to chief of staff would come amid crucial trade talks with China. The New York Times had reported that Mnuchin was a possible contender for the chief of staff job. White
Steven Mnuchin under consideration to be next Trump chief of staff Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-12-09  Authors: brian schwartz
Keywords: news, cnbc, companies, secretary, kelly, steven, house, trade, consideration, administration, according, staff, trump, treasury, chief, mnuchin


Steven Mnuchin under consideration to be next Trump chief of staff

Treasury Secretary Steven Mnuchin is one of the advisors to President Donald Trump under consideration to be the next White House chief of staff, according to two people with direct knowledge of the matter.

Yet Mnuchin has indicated to his inner circle that he feels best served as the head of Treasury, according to these people, who spoke on the condition of anonymity due to the privacy of the ongoing discussions.

Even so, according to a source close to the Treasury secretary, some of Trump’s family members are pushing for Mnuchin as a possible replacement for the departing John Kelly, who is set to leave the administration by the end of the year after an often-chaotic time in the job.

It’s unclear whether Trump himself has spoken with Mnuchin about becoming his next chief of staff. There are other names being mentioned in reports as potential replacements for Kelly, but it’s not clear whether any of them are in position to take the role.

Mnuchin, a former Goldman Sachs executive, is one of the members of the administration who is considered to be more in favor of free trade, as opposed to hawks such as trade advisor Peter Navarro. Mnuchin’s potential move to chief of staff would come amid crucial trade talks with China. Markets, however, could see Mnuchin’s move away from Treasury as a potentially destabilizing action.

The New York Times had reported that Mnuchin was a possible contender for the chief of staff job.

Mnuchin’s spokesman declined to comment. White House press secretary Sarah Huckabee Sanders did not respond to requests for comment.

White House budget chief Mick Mulvaney and U.S. Trade Representative Robert Lighthizer, the president’s chief trade negotiator, are also reportedly on the short list.

Lighthizer had said in an interview with CBS’ “Face the Nation” on Sunday that he had not been asked to replace Kelly.

On Sunday, Nick Ayers, the chief of staff to Vice President Mike Pence who had been the favorite to replace Kelly, announced he would be departing the administration at the end of the year.

People close to Ayers said he could go back to leading Pence’s political action committee, the Great America Committee.

Kelly, who had a tumultuous tenure since taking over the role in summer 2017, had committed to staying through the 2020 election.


Company: cnbc, Activity: cnbc, Date: 2018-12-09  Authors: brian schwartz
Keywords: news, cnbc, companies, secretary, kelly, steven, house, trade, consideration, administration, according, staff, trump, treasury, chief, mnuchin


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Dollar dips versus yen as growth concerns shake confidence

The dollar fell against the yen on Thursday as growing investor aversion to riskier assets hit equities and pushed down U.S. Treasury yields. Global equity markets have been shaken and the dollar fell this week after an inversion in a part of the U.S. Treasury yield curve triggered market concerns about economic growth. U.S. Treasury yields fell, pressuring the dollar. “Lower Treasury yields are driving the dollar lower against the yen. The euro lost 0.42 percent to 127.85 yen, the Australian do


The dollar fell against the yen on Thursday as growing investor aversion to riskier assets hit equities and pushed down U.S. Treasury yields. Global equity markets have been shaken and the dollar fell this week after an inversion in a part of the U.S. Treasury yield curve triggered market concerns about economic growth. U.S. Treasury yields fell, pressuring the dollar. “Lower Treasury yields are driving the dollar lower against the yen. The euro lost 0.42 percent to 127.85 yen, the Australian do
Dollar dips versus yen as growth concerns shake confidence Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-12-06  Authors: matt cardy, getty images
Keywords: news, cnbc, companies, growth, dollar, concerns, meeting, lower, treasury, versus, dips, confidence, yields, fell, yen, yield, week, shake, market


Dollar dips versus yen as growth concerns shake confidence

The dollar fell against the yen on Thursday as growing investor aversion to riskier assets hit equities and pushed down U.S. Treasury yields.

The U.S. currency dropped 0.45 percent to 112.68 yen, handing back its modest gains made overnight.

Global equity markets have been shaken and the dollar fell this week after an inversion in a part of the U.S. Treasury yield curve triggered market concerns about economic growth.

Adding to the jitters on Thursday was the arrest in Canada of a top executive of Chinese tech giant Huawei Technologies, fanning fears of a flare-up in tensions between China and the United States just as the two sides are supposed to be resuming trade negotiations.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 1.93 percent and Japan’s Nikkei lost more than 2 percent.

U.S. Treasury yields fell, pressuring the dollar.

“Lower Treasury yields are driving the dollar lower against the yen. It is difficult to pinpoint how much funds investors have transferred from equities to bonds in the recent risk aversion and it is too early to call a bottom for Treasury yields,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.

The 10-year Treasury yield last stood at 2.8829 percent.

Signals from the Federal Reserve last week that it may be nearing an end to its three-year rate hiking cycle have helped trigger the slide in Treasury yields.

The spread between the two-year and five-year Treasury yields inverted this week and the two-year/10-year spread was at its flattest in more than a decade amid a sharp fall in long-term rates.

A flatter curve is seen as an indicator of a slowing economy, with lower longer-dated yields suggesting a potential recession down the road.

“The dollar could remain under pressure until this month’s Fed meeting as long-term Treasury yields may not be able to mount a rebound until the market sees the Fed’s stance on policy and the economy,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

“The recent reaction to the U.S. yield curve inversion appears a little hysterical, but the dollar will not be given the all clear sign until the Fed meeting is hurdled.”

Fed policymakers are still widely expected to raise interest rates again at their Dec 18-19 meeting, but the market focus is on how many rate hikes will follow in 2019.

The yen, often sought in times of market unrest, made strides against other peers as well.

The euro lost 0.42 percent to 127.85 yen, the Australian dollar slumped 1.02 percent to 81.44 yen and the pound fell 0.55 percent to 143.33 yen.

The euro was little changed at $1.1346 after retreating from this week’s high of $1.1419 scaled on Tuesday.

The Australian dollar, sensitive to swings in risk sentiment, was down 0.58 percent at $0.7226.

The Aussie was already on a shaky footing after shedding nearly 1 percent the previous day on weaker-than-expected third quarter Australian gross domestic product data.

The pound was a shade lower at $1.2723.

Sterling had sunk to a 17-month low of $1.2659 at one point on Tuesday after parliamentary setbacks for Prime Minister Theresa May.

— CNBC contributed to this report.


Company: cnbc, Activity: cnbc, Date: 2018-12-06  Authors: matt cardy, getty images
Keywords: news, cnbc, companies, growth, dollar, concerns, meeting, lower, treasury, versus, dips, confidence, yields, fell, yen, yield, week, shake, market


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Gold pulls back from 5-week high as dollar edges higher

Gold prices dipped on Wednesday, retreating from a more than five-week top hit in the previous session, as the dollar crawled higher. “Gold is mainly tracking the U.S. dollar,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore. “Today’s move in gold prices is a correction because yesterday prices were up quite a bit.” The benchmark 10-year Treasury yield fell to its lowest point since mid-September. $1,242.5 is the level gold has to test before it goes up to the next le


Gold prices dipped on Wednesday, retreating from a more than five-week top hit in the previous session, as the dollar crawled higher. “Gold is mainly tracking the U.S. dollar,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore. “Today’s move in gold prices is a correction because yesterday prices were up quite a bit.” The benchmark 10-year Treasury yield fell to its lowest point since mid-September. $1,242.5 is the level gold has to test before it goes up to the next le
Gold pulls back from 5-week high as dollar edges higher Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-12-05  Authors: simon dawson, bloomberg, getty images
Keywords: news, cnbc, companies, treasury, dollar, high, level, economic, yield, higher, gold, ounce, edges, 5week, trade, prices, pulls, session


Gold pulls back from 5-week high as dollar edges higher

Gold prices dipped on Wednesday, retreating from a more than five-week top hit in the previous session, as the dollar crawled higher.

Spot gold was down 0.3 percent at $1,234.71 per ounce as of 0422 GMT, after hitting its highest since Oct. 26 at $1,241.86 an ounce in the previous session. U.S. gold futures were down 0.5 percent at $1,240.2 per ounce.

“Gold is mainly tracking the U.S. dollar,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore.

“Today’s move in gold prices is a correction because yesterday prices were up quite a bit.”

The dollar index, which measures the greenback against a basket of six major currencies, edged up about 0.1 percent, even though the U.S. currency was under pressure as declining Treasury yields raised concerns over economic growth.

The benchmark 10-year Treasury yield fell to its lowest point since mid-September. The spread between the 10-year yield over its two-year counterpart also shrank to the smallest since the start of the financial crisis in January 2008, signalling to some investors an approaching economic slowdown.

Concerns about weaker growth have stoked bets that the Federal Reserve will end its campaign to raise interest rates sooner than previously thought, analysts said.

U.S. Federal Reserve Chairman Jerome Powell said last Wednesday that U.S. interest rates were nearing neutral levels, which markets interpreted as signalling a slowdown in rate hikes.

Asian equities dipped in line with Wall Street as resurgent trade concerns stoked worries about global economic growth.

U.S. President Donald Trump on Tuesday held out the possibility of an extension of the 90-day trade truce with China, but warned he would revert to tariffs if the two sides could not resolve their differences.

“Normally you would expect a better outing from gold given the absolute beatdown in stocks, but this is a baby step for the precious metal,” said Amit Kumar Gupta, portfolio management services head at Adroit Financial Services in New Delhi.

“Gold at this point will correct a little more. $1,242.5 is the level gold has to test before it goes up to the next level. The downside we are looking at is $1,230,” GoldSilver Central’s Lan said.

Meanwhile, palladium retreated 0.5 percent to $1,226.49 per ounce, trading in close proximity to the yellow metal and after notching its record high hit on Tuesday.

Spot silver fell 0.4 percent to $14.46 per ounce, while platinum was 1.8 percent lower at $788.90 per ounce after hitting its lowest level since Sept. 17 at $787.5 earlier in the session.


Company: cnbc, Activity: cnbc, Date: 2018-12-05  Authors: simon dawson, bloomberg, getty images
Keywords: news, cnbc, companies, treasury, dollar, high, level, economic, yield, higher, gold, ounce, edges, 5week, trade, prices, pulls, session


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Dollar stays defensive on Treasury yield curve inversion worry

The dollar trimmed some of its recent losses but remained under pressure on Wednesday, as an inversion in part of the Treasury yield curve raises concerns about a potential U.S. slowdown. Investors were nervous over an inversion of the yield curve between three-year and five-year U.S. Treasury notes and between two-year and five-year notes which limited the dollar’s gains. These were the first parts of the Treasury yield curve to invert since the financial crisis, excluding very short-dated debt


The dollar trimmed some of its recent losses but remained under pressure on Wednesday, as an inversion in part of the Treasury yield curve raises concerns about a potential U.S. slowdown. Investors were nervous over an inversion of the yield curve between three-year and five-year U.S. Treasury notes and between two-year and five-year notes which limited the dollar’s gains. These were the first parts of the Treasury yield curve to invert since the financial crisis, excluding very short-dated debt
Dollar stays defensive on Treasury yield curve inversion worry Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-12-05
Keywords: news, cnbc, companies, treasury, notes, dollar, inversion, rates, yields, data, curve, yield, defensive, stays, 01, worry


Dollar stays defensive on Treasury yield curve inversion worry

The dollar trimmed some of its recent losses but remained under pressure on Wednesday, as an inversion in part of the Treasury yield curve raises concerns about a potential U.S. slowdown.

The Australian dollar slumped more than half a percent against the greenback as disappointing economic data further dimmed the chance of a rise in rates. The Aussie moved sharply off a four-month top of $0.7394 hit early in the week.

Investors were nervous over an inversion of the yield curve between three-year and five-year U.S. Treasury notes and between two-year and five-year notes which limited the dollar’s gains.

These were the first parts of the Treasury yield curve to invert since the financial crisis, excluding very short-dated debt.

“In the initial phase of the inversion of the yield curve markets are worried about whether there’ll be a recession,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

“They react more aggressively to weak data than to strong data,” Yamamoto said. “I think the dollar can be in correction-mode in a yield-curve inversion environment.”

Against a basket of six key rivals, the dollar edged up 0.1 percent to 97.092, trimming this week’s losses to 0.2 percent. It was 0.6 percent off a 17-month peak of 97.693 touched on Nov. 12.

Interest rate hikes have sent short-dated yields higher, even as slowing economic growth expectations have kept longer-dated yields down.

The dollar has been under pressure since Federal Reserve Chairman Jerome Powell said last Wednesday that U.S. interest rates were nearing neutral levels, which markets interpreted as signalling a slowdown in the pace of rate hikes.

Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank, said there is proof that an inversion between three-month Treasury bills and 10-year Treasury notes precedes a recession.

The spread between three-month Treasury bills and 10-year Treasury notes was 50 basis points as of Tuesday, its smallest since Oct. 2007.

“The Federal Reserve may slow down the pace with which it hikes interest rates, but it won’t lower rates yet, so the likelihood there will be an inversion of these is low,” Sera said.

The euro edged down 0.1 percent to $1.1328 after also slipping 0.1 percent during the previous session.


Company: cnbc, Activity: cnbc, Date: 2018-12-05
Keywords: news, cnbc, companies, treasury, notes, dollar, inversion, rates, yields, data, curve, yield, defensive, stays, 01, worry


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A flattening yield curve means it’s time to worry, but not panic, top economist says

The yield curve has flattened to its lowest level since June 2007 with the 10-year Treasury note yield only around 10 basis points above the 2-year note. “The yield curve has almost always forecasted the direction of trend growth, meaning when the curve flattens, growth with a lag tends to slow and vice versa when the curve steepens,” LaVorgna told CNBC’s “Trading Nation” on Tuesday. The yield curve inverts when shorter-term Treasurys yield more than longer-term Treasury yields. Still, while the


The yield curve has flattened to its lowest level since June 2007 with the 10-year Treasury note yield only around 10 basis points above the 2-year note. “The yield curve has almost always forecasted the direction of trend growth, meaning when the curve flattens, growth with a lag tends to slow and vice versa when the curve steepens,” LaVorgna told CNBC’s “Trading Nation” on Tuesday. The yield curve inverts when shorter-term Treasurys yield more than longer-term Treasury yields. Still, while the
A flattening yield curve means it’s time to worry, but not panic, top economist says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-12-05  Authors: keris lahiff, brendan mcdermid, getty images, loic venance, afp, kcna, thomas barwick getty images, source, lawrence mcdonald
Keywords: news, cnbc, companies, lavorgna, 2year, projections, yield, flattening, panic, treasury, recession, worry, yields, fed, takes, means, curve, economist


A flattening yield curve means it's time to worry, but not panic, top economist says

One key recession indicator is flashing a warning signal to investors.

The yield curve has flattened to its lowest level since June 2007 with the 10-year Treasury note yield only around 10 basis points above the 2-year note.

Joseph LaVorgna, chief economist of the Americas at Natixis, says the move has him “very worried” about what comes next.

“The yield curve has almost always forecasted the direction of trend growth, meaning when the curve flattens, growth with a lag tends to slow and vice versa when the curve steepens,” LaVorgna told CNBC’s “Trading Nation” on Tuesday.

The yield curve inverts when shorter-term Treasurys yield more than longer-term Treasury yields. The relationship between the 2-year and 10-year yields is often used as a barometer of investor expectations for economic growth.

Still, while the flattening yield curve is cause for concern, it’s not yet time to panic, says LaVorgna.

“Typically the 2s/10s has roughly a 16-month lead from when it inverts to a recession and it could be even longer than that,” he said. “Much will depend on what the Fed does.”

The Federal Reserve’s rate moves tend to influence the short-end of the curve, including the 2-year Treasury yield, more quickly. Expectations of a hawkish Fed that hikes too aggressively could tip the short end of the curve higher than the long end.

“If the Fed relents later this month and takes off some of those dots, it takes away some of those aggressive rate-hike projections, the yield curve will then stop flattening, it might steepen out a bit, and that would be a sign the economy, at least in the markets’ mind, has some more room to run,” LaVorgna said.

The Fed is widely expected to raise interest rates at its meeting on Dec. 18-19. Fed members will also release their dot-plot projections, which could ease concerns over how aggressively the central bank will move next year.

“Nothing is preordained. The curve isn’t saying there’s a recession imminently. It says that one is going to happen at some point on the horizon. What the Fed does from here, though, will be central to whether those market fears are realized,” he said.


Company: cnbc, Activity: cnbc, Date: 2018-12-05  Authors: keris lahiff, brendan mcdermid, getty images, loic venance, afp, kcna, thomas barwick getty images, source, lawrence mcdonald
Keywords: news, cnbc, companies, lavorgna, 2year, projections, yield, flattening, panic, treasury, recession, worry, yields, fed, takes, means, curve, economist


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Why investors near retirement should fear the big yield curve inversion

A normal curve with the two-year offering a lower yield than the 10-year is fundamental to how banks make money. Banks borrow short term at lower interest rates so that they can make long-term loans to borrowers at higher interest rates. The difference between those two interest rates, the positive spread, is their profit. There are a few important caveats: In a longer-range chart going back to 1962, there has never been a recession that wasn’t preceded by an inversion of the yield curve. Also i


A normal curve with the two-year offering a lower yield than the 10-year is fundamental to how banks make money. Banks borrow short term at lower interest rates so that they can make long-term loans to borrowers at higher interest rates. The difference between those two interest rates, the positive spread, is their profit. There are a few important caveats: In a longer-range chart going back to 1962, there has never been a recession that wasn’t preceded by an inversion of the yield curve. Also i
Why investors near retirement should fear the big yield curve inversion Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-12-05  Authors: mitch goldberg, guest contributor, scott olson, getty images, zinkevych, istock, blend images – hill street studios, brand x pictures, daniel grill, roger wright
Keywords: news, cnbc, companies, twoyear, curve, inversion, loans, big, fear, rates, making, interest, banks, treasury, investors, near, yield, market, retirement


Why investors near retirement should fear the big yield curve inversion

A normal curve with the two-year offering a lower yield than the 10-year is fundamental to how banks make money. Banks borrow short term at lower interest rates so that they can make long-term loans to borrowers at higher interest rates. The difference between those two interest rates, the positive spread, is their profit. If a bank is borrowing short term at a higher interest rate and making loans to borrowers at a lower interest rate, the difference is a negative spread.

In this interest-rate environment, banks would lose money by making loans. Not necessarily on all loans, but it does make some loans unfeasible and some less profitable, forcing banks to cut back on making loans, thereby choking off the access to credit markets that businesses need to grow.

This helps explain why bank stocks entered a correction on Tuesday. But the news is bad for all businesses.

More from Fixed Income Strategies:

Investors avoid emerging markets due to currency volatility

What to do with an old 401(k)? Very little

Save for retirement … even without an employer 401(k)

When it becomes harder for businesses to borrow, many companies cancel or delay projects and hiring. Weaker enterprises go out of business because they lose access to credit, which in turn causes layoffs. When this happens, it takes about a year, on average, for the U.S. economy to slip into a recession.

Many market pundits say that the history lessons from a flattening or negative yield curve is not relevant in today’s world of massive central bank intervention, encouraging foreign investors to scoop up long-term U.S. treasuries because their home-country government bond yields are much lower.

But to believe that “it’s different this time” means you’d have to believe that the bank-sector math in the above example stopped working. Last I checked, banks still borrow at short-term rates and lend at long-term rates, as long as it is profitable. In other words, central bank-induced market distortions do not change the basics of the banker’s math I described above.

There are a few important caveats: In a longer-range chart going back to 1962, there has never been a recession that wasn’t preceded by an inversion of the yield curve. Yet it doesn’t happen overnight. In fact, stocks have risen in the 18 months after an inversion, though after that all bets are off. Also important: This is a market stat that specifically refers to an inversion between the two-year Treasury and 10-year Treasury bond.

It looks more like that is going to occur, but it still has not happened. On Tuesday the 10-year was at 2.9 percent, still above short-term rates, if not by much — the two-year was at 2.8 percent. On Tuesday it was the five-year Treasury that slipped below the two-year and three-year bonds. In the last three recessions, the curve of the three-year and five-year had inverted an average 26.3 months before the recession.


Company: cnbc, Activity: cnbc, Date: 2018-12-05  Authors: mitch goldberg, guest contributor, scott olson, getty images, zinkevych, istock, blend images – hill street studios, brand x pictures, daniel grill, roger wright
Keywords: news, cnbc, companies, twoyear, curve, inversion, loans, big, fear, rates, making, interest, banks, treasury, investors, near, yield, market, retirement


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Dollar weakens as US bond yields fall, trade tariff postponement supports riskier currencies

The dollar slipped in Asia on Tuesday as U.S. Treasury yields fell to three-month lows, a sign some investors were wagering the Federal Reserve would slow the pace of its rate hikes. The U.S. 10-year Treasury yield fell to 2.94 percent on Tuesday, its lowest level since mid September. “Falling U.S. yields are a negative for the dollar, especially versus the major currencies,” said Rodrigo Catril, senior currency strategist at NAB. Catril added that U.S. Treasury yields are near crucial technical


The dollar slipped in Asia on Tuesday as U.S. Treasury yields fell to three-month lows, a sign some investors were wagering the Federal Reserve would slow the pace of its rate hikes. The U.S. 10-year Treasury yield fell to 2.94 percent on Tuesday, its lowest level since mid September. “Falling U.S. yields are a negative for the dollar, especially versus the major currencies,” said Rodrigo Catril, senior currency strategist at NAB. Catril added that U.S. Treasury yields are near crucial technical
Dollar weakens as US bond yields fall, trade tariff postponement supports riskier currencies Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-12-04  Authors: tyrone siu
Keywords: news, cnbc, companies, trade, dollar, yuan, tariff, weakens, fall, yield, treasury, fed, versus, rate, fell, postponement, yields, riskier, currencies, supports


Dollar weakens as US bond yields fall, trade tariff postponement supports riskier currencies

The dollar slipped in Asia on Tuesday as U.S. Treasury yields fell to three-month lows, a sign some investors were wagering the Federal Reserve would slow the pace of its rate hikes.

The weakness in the dollar comes against the backdrop of a temporary truce in the US-China trade conflict, which has bolstered investor confidence in riskier currencies versus the safe-haven greenback.

The U.S. 10-year Treasury yield fell to 2.94 percent on Tuesday, its lowest level since mid September. The difference in yield between the U.S. 2-year and 10-year tightened to its smallest since July 2007.

The two-10-year yield curve is a key focus for investors as an inversion is seen as predictor of a U.S. recession. A yield curve is said to be inverted when yields on longer-dated maturity bonds are lower than shorter-dated maturity bonds.

The yield curve has flattened as continuing interest rate hikes send short-dated yields higher, while longer-dated Treasuries are supported by tepid inflation and slowing global growth.

“Falling U.S. yields are a negative for the dollar, especially versus the major currencies,” said Rodrigo Catril, senior currency strategist at NAB.

Catril added that U.S. Treasury yields are near crucial technical support levels, a break of which could add further pressure on U.S. yields and the dollar.

The dollar index, a gauge of its value versus six major peers, was off 0.23 percent at 96.8.

The dollar had been supported for most of 2018 by a robust U.S. economy and a relatively hawkish Fed, which is widely expected to raise its policy interest rate later this month.

Markets have priced in an 87 percent probability of a rate hike at the Fed’s Dec. 18-19 meeting.

The dollar came under pressure last week when the market took comments from Fed Chair Jerome Powell as signalling a slower pace of rate hikes.

A more dovish tone from the Fed last week has led markets to question how many times the central bank will hike rates in 2019.

“Given data remains strong, we think the Fed will hike twice in 2019 and that’s more than what the market is pricing in right now…we remain moderately bullish on the dollar,” said Nick Twidale, chief operating officer at Rakuten Securities.

Currencies such as the Chinese yuan, which were battered in the US-China trade war, are expected to trade stronger versus the greenback in the coming weeks as investor sentiment improves.

The dollar fell 0.5 percent against the offshore yuan to 6.8375. On Monday, it lost 1.07 percent, its steepest percentage fall since Aug. 25.

“For now, it seems China has got the best out of G20 and we expect the yuan to remain supported,” added Twidale.

However, he warned that markets need to see a further easing in trade tensions for the risk-on rally to continue.

The Australian dollar gained 0.3 percent in Asian trade at $0.7376. The Reserve Bank of Australia kept its policy cash rate unchanged on Tuesday in a widely expected move.

The yen traded at 113.13 to the dollar, with the greenback losing 0.4 percent versus the Japanese currency.

Elsewhere, sterling was gained 0.2 percent to trade at $1.2744 due to broad dollar weakness. On Monday, the pound fell below $1.27 for the first time since Oct. 31.

Sterling has posted losses for three consecutive weeks as traders bet that British Prime Minister Theresa May will not be able to pass her Brexit deal through parliament on Dec. 11.


Company: cnbc, Activity: cnbc, Date: 2018-12-04  Authors: tyrone siu
Keywords: news, cnbc, companies, trade, dollar, yuan, tariff, weakens, fall, yield, treasury, fed, versus, rate, fell, postponement, yields, riskier, currencies, supports


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Treasury yields continue slide with traders wary of ‘curve inversion’

The difference between the 5-year Treasury inflation-protected securities, or TIPS, and the corresponding Treasurys hit 1.72 percentage points last Tuesday. The closely followed spread between the 2-year Treasury note yield and the 10-year Treasury note yield remains positive. “The move into the long-end is also recessionary (12-18 months out) as the curve continues it way towards full inversion of the 2-year, 10-year spread,” he added. The yield on the benchmark 10-year Treasury note fell 7 bas


The difference between the 5-year Treasury inflation-protected securities, or TIPS, and the corresponding Treasurys hit 1.72 percentage points last Tuesday. The closely followed spread between the 2-year Treasury note yield and the 10-year Treasury note yield remains positive. “The move into the long-end is also recessionary (12-18 months out) as the curve continues it way towards full inversion of the 2-year, 10-year spread,” he added. The yield on the benchmark 10-year Treasury note fell 7 bas
Treasury yields continue slide with traders wary of ‘curve inversion’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-12-04  Authors: thomas franck
Keywords: news, cnbc, companies, note, treasury, spread, wary, yields, curve, continue, rates, slide, traders, inflation, treasurys, inversion, 10year, trading, yield


Treasury yields continue slide with traders wary of 'curve inversion'

Short-term yields, impacted by changes in Fed policy, have been anchored in place in recent months as Chair Jerome Powell led his colleagues in three increases to the overnight lending rate. In contrast, inflation and economic expectations dictate the movement of long-term rates; investors estimate how much they should be compensated beyond inflation for holding government debt over several years.

The difference between the 5-year Treasury inflation-protected securities, or TIPS, and the corresponding Treasurys hit 1.72 percentage points last Tuesday. That spread is a practical look at the market’s projection of where inflation is heading, and is down from highs over 2 percent in October. The closely followed spread between the 2-year Treasury note yield and the 10-year Treasury note yield remains positive.

There has been “a tremendous move in the long-end as short rates have hardly moved and 30-year bonds are up five-eights of a point. I believe a lot of this move is a function of portfolios liquidating credit and equity exposure in favor of

long-dated Treasurys,” wrote Tom di Galoma, head of Treasury trading at Seaport Global Holdings.

“The move into the long-end is also recessionary (12-18 months out) as the curve continues it way towards full inversion of the 2-year, 10-year spread,” he added.

The yield on the benchmark 10-year Treasury note fell 7 basis points to 2.915 percent at around 4:38 p.m. ET, while the benchmark on the 30-year Treasury bond was also lower, trading at 3.17 percent. Bond yields move inversely to prices.


Company: cnbc, Activity: cnbc, Date: 2018-12-04  Authors: thomas franck
Keywords: news, cnbc, companies, note, treasury, spread, wary, yields, curve, continue, rates, slide, traders, inflation, treasurys, inversion, 10year, trading, yield


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