By Ira Iosebashvili Aug 4 (Reuters) – U.S.
Treasury yields edged lower on Thursday, as a gloomy outlook from the Bank of England stoked global recession concerns and investors braced for key U.S. economic data to wrap up what had been a volatile week for the bond market. The yield on benchmark 10-year Treasury note was down 6 basis points to 2.688%.
The Bank of England on Thursday raised interest rates by the most in 27 years and warned that a long recession is on its way, law firm (employment-attorney-dallas.weebly.com) exacerbating worries that the Fed and other central banks will have to continue tightening monetary policy to fight inflation even as it crimps U.S.
growth. The decline in yields is likely “in sympathy with what is happening in the UK,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. Key Treasury yields ticked slightly lower on early economic data. The number of Americans filing new claims for unemployment benefits increased last week, suggesting some softening in the labor market, though overall conditions remain tight, data on Thursday showed.
Meanwhile the U.S. trade deficit narrowed sharply in June as exports surged to a record high, a trend that could see trade continuing to contribute to gross domestic product in the third quarter. Investors will get a key snapshot of how the U.S. economy is faring on Friday, when the Labor Department reports employment data for July.
Signs that the U.S. job market continues to be robust will likely bolster expectations for more monetary policy tightening from the Fed and fuel recession worries, potentially sending yields lower. “I think the jobs data will continue to tell us that inflation is high and job growth is solid, and it will continue to increase expectations that the Fed will tighten policy,” Goldberg said.
A trio of Federal Reserve officials from across the policy spectrum signaled on Tuesday that they remained resolute on getting U.S. interest rates up to a level that will put a dent in the highest inflation since the 1980s. The yield on the 30-year Treasury bond was down 2 basis points to 2.957%.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at -38.3 basis points. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 3.9 basis points at 3.069%.
The 10-year TIPS breakeven rate was last at 2.472%, indicating the market sees inflation averaging around 3.5% a year for the next decade. August 4 Thursday 10:10AM New York / 1410 GMT Price Current Net Yield % Change (bps) Three-month bills 2.4325 2.4814 -0.006 Six-month bills 2.875 2.9577 -0.031 Two-year note 99-228/256 3.057 -0.051 Three-year note 100-6/256 2.9912 -0.062 Five-year note 99-208/256 2.7905 -0.082 Seven-year note 99-64/256 2.7437 -0.084 10-year note 101-184/256 2.6738 -0.074 20-year bond 101-168/256 3.1368 -0.053 30-year bond 98-164/256 2.9437 -0.033 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S.
2-year dollar swap 27.75 0.25 spread U.S. 3-year dollar swap 10.75 -0.50 spread U.S. 5-year dollar swap 4.25 0.25 spread U.S. 10-year dollar swap 6.25 -0.75 spread U.S. 30-year dollar swap -29.00 -0.25 spread (Reporting by Ira Iosebashvili; Editing by Alden Bentley)