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* Month-end buying supports Treasuries prices
* Yields fall from multi-month and multi-year highs
* Traders view Trump-induced selloff as possibly overdone
* Italy referendum, ECB and OPEC meeting outcomes awaited
(Updates prices, adds comment) NEW YORK, Nov 28 (Reuters) – U.S. Treasury yields fell on Monday from last week’s highs on month-end buying and views that a selloff that followed the surprise U.S. presidential election victory of Donald Trump may have gone too far. Analysts said demand for U.S. government bonds, which typically kicks in toward the end of the month as investors seek to rebalance their portfolios, was supporting prices and pushing down yields. Traders were also likely buying Treasuries on the view that the selloff, which sent benchmark 10-year yields to a 16-month high of 2.417 percent on Nov. 23 and two-year yields to a 6-1/2-year high of 1.17 percent on Friday, had become overextended, analysts added. «The selloff has been quite dramatic,» said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York. «It has kind of run ahead of itself.» Fueling the selloff were bets that Trump will adopt policies that increase spending and debt as well as spur growth and inflation, all of which would likely erode the value of U.S. bonds. U.S. 10-year Treasuries were last up 14/32 in price to yield 2.3214 percent, from a yield of 2.370 percent late Friday. Two-year notes were last up 1/32 in price to yield 1.1109 percent, from a yield of 1.135 percent late Friday. Other maturities were also lower in yield, with 30-year yields last down three basis points from late Friday at 2.9851 percent and seven-year yields last down five basis points at 2.1371 percent. «I would say a little bit of it is probably the month-end buying after a very significant move earlier in the month,» said Lou Brien, a market strategist at DRW Trading in Chicago. He said weakness in U.S. stocks was also spurring demand for safe-haven Treasuries. The benchmark S&P 500 stock index was last down 0.33 percent. U.S. Treasuries are on track to fall 2.7 percent in November to mark their worst monthly performance since Jan. 2009, according to Bloomberg Barclays index data. Rajappa of Societe Generale said investors were also bracing for Italy’s Dec. 4 referendum on constitutional reform and the Dec. 8 meeting of the European Central Bank. Uncertainty over the outcomes of those events has likely contributed to the pause in the Treasury market’s selloff, Rajappa said. Traders are also awaiting Friday’s U.S. November jobs report. Economists polled by Reuters expect U.S. employers to have added 175,000 jobs.
November 28 Monday 3:04PM New York / 2004 GMT Price
US T BONDS DEC6 153-20/32 0-26/32 10YR TNotes DEC6 125-160/256 0-108/25
6
Price Current Net Yield % Change
(bps)
Three-month bills 0.465 0.472 -0.030 Six-month bills 0.5875 0.5974 -0.036 Two-year note 99-200/256 1.1109 -0.024 Three-year note 98-238/256 1.37 -0.040 Five-year note 99-192/256 1.8025 -0.044 Seven-year note 99-244/256 2.1322 -0.057 10-year note 97-44/256 2.3196 -0.050 30-year bond 97-212/256 2.9851 -0.033
DOLLAR SWAP SPREADS
Last (bps) Net
Change (bps)
U.S. 2-year dollar swap 20.25 -0.50
spread
U.S. 3-year dollar swap 13.00 0.25
spread
U.S. 5-year dollar swap -2.00 0.50
spread
U.S. 10-year dollar swap -16.75 0.75
spread
U.S. 30-year dollar swap -56.00 0.75
spread
(Reporting by Sam Forgione and Karen Brettell; Editing by Bernadette Baum)
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