TREASURIES-Yields rise with stocks on China stimulus hopes
(Adds Fed meeting minutes, updates prices) * Producer prices rise, housing data better than expected * Fed policymakers expect to hold rates steady this year By Karen Brettell NEW YORK, Feb 19 (Reuters) - U.S. Treasury yields edged higher on Wednesday as a report that China will take more steps to bolster its virus-hit economy boosted risk taking, and U.S. economic data beat economists’ expectations. Bloomberg News reported that Beijing was considering cash injections or mergers to bail out airlines hit by the virus, sending stocks higher. The death toll from the coronavirus climbed above 2,000 in China, but the tally of newly reported cases fell for a second day to the lowest since January. “Equities are performing well, after being under a bit of pressure,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York. The spread of the virus is central to risk appetite as investors weigh how it will affect the global economy. “It really does come down to the impact of the coronavirus on global growth starting in Asia, going into the supply chain, and presumably at some point trickling through to the domestic economic outlook,” Lyngen said. Benchmark 10-year note yields rose one basis point to 1.57%. Economic data on Wednesday showed that U.S. producer prices increased in January by the most in more than a year, boosted by rises in the costs of services such as healthcare and hotel accommodation. U.S. homebuilding fell less than expected in January, while permits surged to a near 13-year high, pointing to sustained housing market strength amid lower mortgage rates. Minutes from the Federal Reserve's January meeting released on Wednesday showed that policymakers were cautiously optimistic about their ability to hold interest rates steady this year, even as they acknowledged new risks caused by the coronavirus outbreak. February 19 Wednesday 2:30PM New York / 1930 GMT Price Current Net Yield % Change (bps) Three-month bills 1.5575 1.5897 0.008 Six-month bills 1.5175 1.5547 -0.027 Two-year note 99-234/256 1.4198 0.010 Three-year note 99-246/256 1.3884 0.013 Five-year note 99-220/256 1.4045 0.012 Seven-year note 100-12/256 1.4928 0.011 10-year note 99-108/256 1.5627 0.007 30-year bond 99-208/256 2.0083 0.002 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 2.75 0.50 spread U.S. 3-year dollar swap 1.25 0.00 spread U.S. 5-year dollar swap -1.00 0.25 spread U.S. 10-year dollar swap -6.00 0.50 spread U.S. 30-year dollar swap -33.75 0.25 spread (Reporting by Karen Brettell; editing by Jonathan Oatis and Leslie Adler)
