TREASURIES-U.S. yields rise on strong housing and manufacturing data
By Ross Kerber BOSTON, Jan 17 (Reuters) - U.S. Treasury yields rose on Friday after strong homebuilding and manufacturing reports and upbeat corporate earnings, while traders eyed the potential impact of a new government bond coming by summer. The benchmark 10-year yield was up 2.5 basis points in morning trading at 1.8337%. U.S. homebuilding surged to a 13-year high in December according to federal data released Friday morning, suggesting the housing market recovery was back on track amid low mortgage rates and could help support the longest economic expansion on record. "The housing data definitely got us going," said Tom Simons, money market economist for Jefferies. Investors likely paid extra attention to the number because few other sectors have shown much growth lately except for consumer spending. Simons said longer-term yields also may have gotten a boost because of Thursday's announcement by the U.S. Treasury that it will begin issuing a new 20-year bond in the first half of 2020 as it seeks to plug budget deficits expected to top $1 trillion annually. "The long end of the curve is more sensitive than it might otherwise be to positive economic news," Simons said. The 30-year bond was up 3.5 basis points at 2.2936%. Meanwhile the two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down less than a basis point at 1.5654%. U.S. manufacturing output rose unexpectedly in December as a drop in motor vehicle output was outpaced by increases in production of other durable goods, food and beverages, and other products. U.S. stock indexes opened at record highs on Friday. Shares were driven by optimism over corporate earnings, upbeat economic data and indications of resilience in China's economy. January 17 Friday 9:38AM New York / 1438 GMT Price Current Net Yield % Change (bps) Three-month bills 1.525 1.5561 -0.003 Six-month bills 1.525 1.5621 0.000 Two-year note 100-29/256 1.5654 -0.003 Three-year note 99-194/256 1.5834 0.005 Five-year note 100-140/256 1.6343 0.009 Seven-year note 100-4/256 1.7475 0.014 10-year note 99-64/256 1.8337 0.025 30-year bond 101-192/256 2.2936 0.035 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.00 1.25 spread U.S. 3-year dollar swap 4.50 1.00 spread U.S. 5-year dollar swap 1.50 1.00 spread U.S. 10-year dollar swap -4.50 0.25 spread U.S. 30-year dollar swap -31.75 -0.75 spread (Editing by Nick Zieminski)
