TREASURIES-U.S. yields rise alongside online retail sales

BY Reuters | ECONOMIC | 09/16/21 11:18 AM EDT
       By Rodrigo Campos
    NEW YORK, Sept 16 (Reuters) - U.S. government bond yields
rose on Thursday after a surprisingly strong reading in retail
sales lifted some concerns about growth in the world's largest
economy.
    The unexpected rebound in retail sales, on the back of
stronger online purchases and reported by the Commerce
Department, clashes against recent downgrades on estimates for
U.S. gross domestic product for the current quarter, which have
kept a downward pressure on yields.
    The move higher on the 10-year yield, which hit a one-week
peak of 1.351% earlier on Thursday, offsets downward moves from
earlier in the week, which came after lower inflation readings,
and leaves the benchmark yield barely changed since last Friday.
    "It's a little bit of a realignment of expectations for
growth, generally being viewed as a positive sign," said Subadra
Rajappa, head of U.S. rates strategy at Societe Generale in New
York, adding it is hard to read too much into a sole data point.
    "We did see a very strong bull flattening of the curve,
following the CPI number earlier on this week. You've seen a
little bit of a reversal on the back of that," Rajappa said.
    The yield on 10-year Treasury notes was up 2
basis points at 1.324%.
    The yield on the 30-year Treasury bond was up
0.8 basis points at 1.877%.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on 2- and 10-year Treasury
notes, seen as an indicator of economic
expectations, was at 110.4 basis points, near the midpoint of
this week's range. The 5-year to 30-year spread rose to 104.8
bps, on track to close the week at or near its flattest in 13
months.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was up 0.6 basis
point at 0.219%.


    September 16 Thursday 11:00 AM New York / 1500 GMT
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.04         0.0406    0.000
 Six-month bills               0.045        0.0456    -0.002
 Two-year note                 99-209/256   0.2193    0.006
 Three-year note               99-196/256   0.4539    0.016
 Five-year note                99-160/256   0.8274    0.027
 Seven-year note               100          1.125     0.030
 10-year note                  99-80/256    1.3242    0.020
 20-year bond                  98-216/256   1.8194    0.014
 30-year bond                  102-208/256  1.8767    0.008

   DOLLAR SWAP SPREADS
                               Last (bps)   Net
                                            Change
                                            (bps)
 U.S. 2-year dollar swap        10.75         0.25
 spread
 U.S. 3-year dollar swap        12.25         0.75
 spread
 U.S. 5-year dollar swap        10.25         0.25
 spread
 U.S. 10-year dollar swap        3.25         0.00
 spread
 U.S. 30-year dollar swap      -23.75         0.25
 spread



 (Reporting by Rodrigo Campos, additional reporting by Lucia
Mutikani; Editing by Steve Orlofsky
)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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