* Risk sentiment improves on hopes of China stimulus
* Producer prices rise, housing data better than expected
* Fed to release minutes from January meeting
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 after
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,
which increased risk appetite, sending stocks higher and
reducing demand for safe-haven bonds.
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 two basis
points to 1.57%.
Economic data on Wednesday showed that U.S. producer prices
increased by the most in more than a year in January, boosted by
rises in the costs of services such as healthcare and hotel
accommodation.
U.S. homebuilding also 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.
The Federal Reserve will release minutes from its January
meeting on Wednesday, though it is not expected to contain
details on the probable economic impact of the coronavirus.
February 19 Wednesday 9:20AM New York / 1420 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 1.545 1.5769 -0.005
Six-month bills 1.5175 1.5547 -0.027
Two-year note 99-231/256 1.426 0.016
Three-year note 99-242/256 1.3937 0.019
Five-year note 99-212/256 1.4111 0.018
Seven-year note 100 1.5 0.018
10-year note 99-84/256 1.573 0.017
30-year bond 99-140/256 2.0202 0.014
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 2.25 0.00
spread
U.S. 3-year dollar swap 1.25 0.00
spread
U.S. 5-year dollar swap -1.25 0.00
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)
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