THE DAILY NEWS

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CNBC

"Treasury yields rise slightly after Yellen’s confirmation as Treasury secretary"


Maggie Fitzgerald @mkmfitzgerald Vicky McKeever @vmckeevercnbc

Published Tue, Jan 26 2021

Key Points

* Former Federal Reserve Chair Janet Yellen was confirmed as Treasury secretary on Monday evening.

* Treasury yields rose slightly on Tuesday, despite concerns about the potential opposition in Congress to President Joe Biden’s proposed $1.9 trillion stimulus package.


U.S. Treasury yields edged slightly higher on Tuesday morning, after former Federal Reserve Chair Janet Yellen was confirmed as Treasury secretary on Monday evening.

The yield on the benchmark 10-year Treasury note rose to 1.048% at 4:00 p.m. ET, while the yield on the 30-year Treasury bond advanced to 1.807%.

Yields move inversely to prices.

Treasury yields rose slightly on Tuesday, despite concerns about the potential opposition in Congress to President Joe Biden’s proposed $1.9 trillion stimulus package.

Traders will be watching for the International Monetary Fund’s world economic outlook, which is published twice a year and is due out at 8 a.m. ET.

Home prices rose 9.5% nationally in November year-over-year, the strongest annual pace in more than six years, according to S&P CoreLogic Case-Shiller Home Price Indices.

Weekly API stock change data for crude oil is then due out at 4:30 p.m. ET.

Auctions will be held Tuesday for $34 billion of 52-week bills, $30 billion of 119-day bills, $30 billion of 42-day bills and $61 billion of 5-year notes.

Data also provided by Reuters

https://www.cnbc.com/2021/01/26/us-bond ... ation.html
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RIGZONE

"Light Crude Advances Amid Weaker US Equities"


by Bloomberg | Andres Guerra Luz

Wednesday, January 27, 2021

(Bloomberg) -- Oil erased most of its gains as futures traded in tandem with broader markets, with demand concerns prevailing over the biggest drop in U.S. crude supplies since last summer.

While futures in New York closed 0.5% higher on Wednesday, a weaker U.S. equity market ultimately pushed the benchmark down in after-market trading.

A meaningful recovery in demand still appears to be a ways off.

In the latest example of the pandemic’s boomerang effect in fuel markets, traffic in Los Angeles dropped sharply this past month after stricter stay-at-home measures were enforced in California, while consumption in China also weakened.

“There’s still a lot of concerns on the demand side and that contributes to stanching these rallies,” said Andrew Lebow, senior partner at Commodity Research Group.

The Chinese government “is urging its citizens not to travel in what is the busiest travel time of the year."

"Clearly, that’s going to have an impact on demand.”

Earlier in the session, a U.S. government report showed domestic crude inventories dropped by nearly 10 million barrels last week and exports surged.

While the rally in headline crude prices has slowed, firmness in the oil market’s underlying structure has proven resilient as supplies are seen declining globally.

The premium of Brent and West Texas Intermediate crude’s nearest contract has been widening over the next one in a bullish formation known as backwardation.

OPEC Secretary General Mohammad Barkindo said Wednesday at an S&P Global Platts virtual conference that he is “cautiously optimistic” about an economic rebound this year and a pickup in oil demand.

In addition to the inventory decline in the U.S., supplies are also seen dropping globally, with Saudi Arabia and Iraq planning to throttle back production next month as the OPEC+ coalition seeks to shore up prices against resurgent virus infections.

The rise in U.S. exports is a “signal that global demand continues to improve and is likely stronger than here in the U.S., at least for now,” said Rob Thummel, a portfolio manager at Tortoise, a firm that manages roughly $8 billion in energy-related assets.

Prices

West Texas Intermediate for March delivery rose 24 cents to settle at $52.85 a barrel.

Brent for the same month fell 10 cents to end the session at $55.81 a barrel.

A stronger dollar on Wednesday also reduced the appeal for commodities priced in the currency.

The U.S. government report also showed crude inventories at the nation’s biggest storage hub at Cushing, Oklahoma, declined to the lowest since July.

Several U.S. refiners are delaying maintenance, an indication that more declines at Cushing are likely.

Meanwhile, while China has been a rare bright spot in an otherwise dismal demand outlook this past year, air and road travel has fallen and will have a noticeable impact on crude consumption.

Rush-hour road congestion at 8 a.m. local time on Monday in both Shanghai and Beijing was below typical 2019 levels for the second straight week, according to in-car navigation data collected by TomTom.

The last time congestion was down at those levels was during a public holiday in October.

Other oil-market news:

Saudi Arabia wants to emulate Germany’s success with renewable energy and be a pioneer in hydrogen production, as the world’s biggest exporter of oil seeks to diversify its economy.

President Joe Biden will take executive action on Wednesday to combat climate change, including temporarily blocking new leases for oil drilling on federal lands, ordering a review of fossil-fuel subsidies and other measures to overhaul the U.S. energy mix.

https://www.rigzone.com/news/wire/light ... 4-article/
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REUTERS

"Fed's Powell: Don't blame us for GameStop frenzy"


By Jonnelle Marte

January 27, 2021

NEW YORK, Jan 27 (Reuters) - Those thinking the latest and most glaring evidence of stock market froth - the more than tenfold increase in GameStop Corp shares in two weeks - might draw Federal Reserve Chair Jerome Powell into a “mea culpa” moment may be disappointed.

Powell, a former private equity industry attorney who knows a thing or two about a stock price, on Wednesday declined outright to comment on the extraordinary rise in the shares of an unprofitable company that seemed proof positive the market had become detached from reality.


In his press conference following the Fed’s latest two-day policy meeting, he pushed back on the suggestion that the Fed’s super-low interest rates and massive bond purchases were creating asset bubbles, such as the one apparently forming in GameStop that has transfixed market mavens and the general public alike.

“I think the connection between low interest rates and asset values is probably something that’s not as tight as people think because a lot of different factors are driving asset prices at any given time,” Powell said.

It was a telling response from arguably the world’s single-most influential financial figure, who came to his central banking post through Wall Street and whose policies in response to the COVID-19 crisis have been praised for their speed and boldness but also criticized for helping fuel a “K-shaped” economic recovery that favors asset owners.

Indeed, Powell said his motivation is fostering an economic environment that will help the millions still out of work in the pandemic to regain employment.

“In a world where, almost a year later we’re still 9 million jobs at least ... short of maximum employment, it’s very much appropriate that monetary policy be highly accommodative,” said Powell, whose remarks followed the Fed’s decision to leave its benchmark interest rate near zero and to keep buying $120 billion a month in bonds.

That said, Powell said the Fed is cognizant that financial risks can emerge in periods of extensive accommodation, but it prefers to address those through so-called macroprudential tools largely focused on keeping the banking sector safe and sound.

“We don’t really think we’d be successful in every case in picking the exact right time to intervene in markets,” Powell said.

The Fed also coordinates with other regulators when it comes to monitoring financial stability risks in the nonbank sector, he said.

“We monitor financial conditions very broadly, and while we don’t have jurisdiction over ... many areas in the nonbank sector, other agencies do,” he said.

GameStop’s dizzying rise has been assigned by many market watchers to a battle between retail investors who have piled into the shares and hedge funds and others who have placed big bets against the struggling video game retailer.

It has also become a rallying cry among some who favor more market regulatory oversight.

On Wednesday, GameStop closed at $347.51 a share.

Its price on Jan. 12?

$19.95.

The White House and Treasury Department are monitoring the situation with GameStop and other companies that have seen sharp gains in the last week or so, White House Press Secretary Jen Psaki said on Wednesday.

Back at the Fed, though, Powell said changing monetary policy to ward off bubbles would not be his first choice.

“If you raise interest rates and thereby tighten financial conditions and reduce economic activity in order to address asset bubbles and things like that, will that even help?"

"Will it actually cause more damage?” he said.

“I think that’s unresolved ..."

"We would rely on macroprudential and other tools to deal with financial stability issues.”

(Reporting by Jonnelle Marte in New York; Editing by Dan Burns and Stephen Coates)

https://www.reuters.com/article/usa-fed ... SL1N2K22Y4
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REUTERS

"TREASURIES-U.S. yields fall as Fed stands pat on policy, notes slowing economy"


By Gertrude Chavez-Dreyfuss

January 27, 2021

* Fed leaves rates unchanged, bond-buying plan intact

* Fed's Powell says long way away from tapering bond buys

* U.S. yield curve flattens

* U.S. yields fall to three-week lows

* Bonds look to small sector of stock market


NEW YORK, Jan 27 (Reuters) - U.S. Treasury yields fell on Wednesday after the Federal Reserve left interest rates unchanged and kept its bond-buying program intact, as widely expected, noting that the economic recovery has slowed in recent months.

In his press briefing after the statement, Fed Chairman Jerome Powell balanced his downbeat near-term assessment of the economy with optimism about a likely recovery in the second half of the year as vaccines become more widely distributed.

Powell said while the U.S. economy is still a long way away from a full recovery, he noted that there is good evidence to support expectations of stronger growth in the back half of 2021.

"The market is digesting Powell's comments and he just reiterated the Fed's dovish stance," said Andy Richman, senior portfolio manager at Sterling Capital Management.

"But rates have come down from the highs on the 10-year and we're bumping up against the 1% mark."

"Given how much sell-off we're seeing in equities today, Treasuries are not rallying that much here."

Richman added that this goes back to whether investors think in the long term yields would go higher once the vaccine rollouts go widely.

The Fed on Wednesday pledged again to keep its support for the U.S. economy, until there is a full rebound from the pandemic-triggered recession.

Powell, in his briefing, also said the Fed is not tapering its bond purchases anytime soon.

Yields across the curve dropped to three-week lows earlier in the session.

That flattened the yield curve, an indicator of risk appetite, with the spread between two-year and 10-year notes hitting 88.40 basis points, the narrowest gap in three weeks.

In late afternoon trading, the U.S. benchmark 10-year yield fell to 1.011%, from 1.04% late on Tuesday.

It earlier fell to 1.001%, its lowest since Jan. 6.

U.S. 30-year yields dropped to 1.771% from Tuesday's 1.802%, after earlier sliding to a three-week low of 1.761%.

At the front end, U.S. two-year yields were down at 0.119%, hitting a three-week low of 0.115% earlier.

Bond investors are also looking at the stock market, in which small companies such as GameStop with the largest bearish bets against them have risen 60% on average so far this year, outperforming the rest of the market.

"It just becomes potentially endemic and it's like a virus," said Ellis Phifer, market strategist, at Raymond James in Memphis, Tennessee.

"If it continues to spread, you get more margin calls, more firms having to potentially shut down and they're leveraged so they start selling more and you can end up in a bad spot."


The break-even inflation rate on 10-year TIPS, meanwhile, which measures expected annual inflation over the next decade, dropped below 2% for the first time since late December.

It was last at 1.989%, down from Tuesday's 2.004%.

Analysts have been touting for weeks that the rally in breakeven rates are overdone and they are due for a pullback.

https://www.reuters.com/article/usa-bon ... SL1N2K22XP
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REUTERS

"Stocks tumble on recovery fears; dollar climbs"


By Rodrigo Campos

January 26, 2021

NEW YORK (Reuters) - Stocks fell around the world on Wednesday as investors turned more cautious over stretched valuations and the economic impact of the COVID-19 pandemic, while the dollar rose on its safe-haven appeal.

Oil prices were little changed as demand concerns were mostly offset by a large drop in U.S. crude inventories.

Stocks in the United States added to losses after the Federal Reserve left its key rate near zero and made no change to its monthly bond purchases, while flagging a potential slowdown in the pace of the economic recovery.

Wall Street had been weighed earlier by a slump in Boeing Co and by hedge funds dumping long positions to cover a short squeeze in GameStop Corp and AMC Entertainment.

“Fears are circulating that some investment funds might be quickly closing out positions as a way of shoring up their cash,” said David Madden, market analyst at CMC Markets UK.

“It is early days yet but we might see selling pressure ramp up for fear there could be a stampede for the exit.”


The Dow Jones Industrial Average fell 2.05%, the S&P 500 lost 2.57% and the Nasdaq Composite dropped 2.61%.

MSCI’s benchmark for global equity markets fell 2.04% to 652.5, while its index for emerging markets stocks fell 1.25%.

The pan-European STOXX 600 index lost 1.16% after the German government slashed its growth forecast for this year, while talk of further interest rate cuts by the European Central Bank hit banking stocks and the euro.

In currency trading, the dollar index rose 0.47%, with the euro down 0.4% to $1.2111.

“I think if anything the dollar is finding support from the Fed’s more cautious message,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

“I would say that the Fed having noted the recent moderation in the pace of the recovery is adding to concerns about the near-term outlook."

"The risk-off move today has gained traction in the Fed’s more cautious outlook for growth.”

The Japanese yen weakened 0.47% versus the greenback at 104.09 per dollar.

In emerging markets, currencies in Russia, Brazil, Mexico, and South Africa all lost over 1% on the day versus the greenback.

U.S. Treasury yields slid in line with weaker stocks as risk appetite hit a wall.

“(The Fed) did sound a little bit more downbeat, a little bit more concerned about the pace of the recovery and the pace of progress on vaccinations as well,” said Gennadiy Goldberg, senior U.S. rates strategist at TD Securities in New York.

“I think it’s meant to convey that they still realize there’s still quite a bit of weakness and that we’ve a long way to go before the recovery really takes off.”

Benchmark 10-year notes last rose 9/32 in price to yield 1.011%, from 1.04% late on Tuesday.

In commodities markets, oil prices were little changed despite a massive drawdown in U.S. crude inventories, as ongoing concerns about the coronavirus pandemic tempered buying interest.

Brent crude futures fell $0.42 to $55.49 a barrel.

U.S. crude futures slid $0.04 to $52.57 a barrel.

Gold prices fell, pressured in part by the dollar strength.

Spot gold dropped 0.5% to $1,841.13 an ounce.

Silver fell 1.13% to $25.16.

Bitcoin last fell 3.91% to $31,234.68.

Reporting by Rodrigo Campos; additional reoirting by Herbert Lash, Laila Kearney, Gertrude Chavez-Dreyfuss, Chuck Mikolajczak and Karen Brettell; Editing by Matthew Lewis

https://www.reuters.com/article/global- ... SL1N2K22XN
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RIGZONE

"Oil Prices Decline Under Virus Variant Cloud"


By Bloomberg | Andres Guerra Luz

Thursday, January 28, 2021

(Bloomberg) -- Oil declined the most in nearly a week with the spread of new Covid-19 variants and tighter lockdown measures weighing on nascent hopes of a demand recovery.

Futures in New York fell nearly 1% after choppy trading earlier on Thursday.

The coronavirus variant identified in South Africa is reported to have reached the U.S.

At the same time, worries over vaccine shortages in Europe continued to emerge, with Germany casting doubt on the effectiveness of AstraZeneca Plc’s shot for the elderly.


“Concerns about the new Covid variants causing shutdowns in Europe and Asia, China especially,” are stoking worries over consumption, said Michael Lynch, president of Strategic Energy & Economic Research.

“The market was balanced and inventories were coming down,” but now “people are worried demand may weaken even further.”

Oil has struggled to break far above $53 a barrel in New York over the past few weeks as increased coronavirus lockdowns remain a risk to crude’s demand recovery.

In Europe, air traffic could be down 70% this summer if travel curbs remain, according to Eurocontrol.

“The vaccine and virus news remain ever-present as an issue,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.

The crude market “needs a much larger tailwind in terms of demand and travel is not coming as quickly as people would hope.”

Still, global supply curbs are helping push crude into a bullish structure called backwardation, when nearer contracts are more expensive than later-dated ones.

Supply reductions could supersede the drag on demand from the virus and send Brent crude past $70 a barrel by the end of this year, according to JPMorgan Chase & Co.

Prices

West Texas Intermediate for March delivery fell 51 cents to settle at $52.34 a barrel.

Brent for the same month slipped 28 cents to end the session at $55.53 a barrel, posting the biggest daily decline since Jan. 22.

Brent’s nearest timespread is at its strongest level since late February ahead of the expiry of its March contract on Friday.

Meanwhile, continued declines of U.S. crude stockpiles at the nation’s key storage hub in Cushing, Oklahoma, is helping drive a similar firming in WTI’s forward curve.

The U.S. benchmark crude’s so-called prompt spread is also in backwardation.

Other oil-market news:

Saudi Aramco will sell more shares as part of the kingdom’s plan to boost the size of its sovereign wealth fund to $1.1 trillion by 2025, according to Saudi Crown Prince Mohammed bin Salman.

An increase in Iranian oil exports to China has received some unwanted attention in recent days and is now prompting fears of a clampdown.

Chevron Corp. and Reliance Industries Ltd. are meeting with U.S. State Department officials to request a rollback of some of the previous administration’s restrictions against Venezuela’s oil industry.

--With assistance from Grant Smith.

https://www.rigzone.com/news/wire/oil_p ... 8-article/
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CNN

"Pelosi says part of Capitol Hill security issue is 'the enemy is within the House of Representatives'"


By Daniella Diaz, Annie Grayer and Kristin Wilson, CNN

Updated 7:39 PM ET, Thu January 28, 2021

(CNN)House Speaker Nancy Pelosi told reporters Thursday that she's committed to addressing the concerns of her colleagues over security but said that effort is hampered because "the enemy is within the House of Representatives," referencing the rhetoric and behavior of some Republican members of Congress.

Pelosi was asked about how members are concerned for their own security in the wake of the Capitol attack and violent rhetoric from other members, following a letter more than 30 lawmakers signed asking for more flexibility regarding the use of congressional allowance for personal security in their home districts and other security related requests.

Pelosi also cited a security review currently being conducted by retired Lt. General Russel Honoré, with whom she met on Thursday to receive an initial assessment.

"So we want to have a scientific approach to how we protect members," Pelosi said at her weekly news conference.

"I do believe and I have said this all along we will probably need a supplemental for more security for members when the enemy is within the House of Representatives, a threat that members are concerned about in addition to what is happening outside."


When pressed by reporters about what she meant by that comment, Pelosi said, "it means that we have members of Congress who want to bring guns on the floor and have threatened violence on other members of Congress."

Pelosi did not clarify which lawmakers she was referencing.

US Capitol Police had investigated an incident in which a Republican lawmaker was stopped from bringing a concealed gun onto the House floor last week, sources told CNN, the first time a member of Congress has been discovered with a firearm by the metal detectors now set up outside the legislative chamber.

In response to the letter requesting additional resources and flexibility for security, Pelosi said Thursday the concerns in a letter from lawmakers requesting more flexibility for using their congressional allowances has already been addressed.

"First of all, I appreciate the letter from the members but most of the questions, items on the list, have already been done," she said.

"Perhaps they were not aware, and I take responsibility for them not being aware."

Her remarks come after more than 30 House members sent a letter to Pelosi and House Minority Leader Kevin McCarthy on Thursday requesting more flexibility for using their congressional allowances toward helping their personal safety by hiring local law enforcement or other security personnel for their home district offices.

"While the U.S. Capitol is protected by the United States Capitol Police with the support of strong security measures, including vehicle barriers and metal detectors, most Members spend the majority of their time in their Congressional Districts where security is often sparse," they wrote in the letter.

"Protecting Members in their District is much harder because local law enforcement agencies are stretched and limited, and often don't have sufficient staffing or money to provide regular protection to Members."

"Except for Leadership, Members do not have security details protecting them."

Thursday's letter took issue with existing rules regarding the rules governing member allowance use, describing the protocols as "constrictive and anachronistic, set in a time before the current."

CBS News first reported the letter.

The request is the latest development in a string of reactions to the deadly Capitol Hill riot on January 6 that has shaken lawmakers and their staff.

As threats continue to mount against members of Congress, concern is growing about the safety of some lawmakers when they travel outside Washington and the security bubble it provides, multiple sources told CNN earlier this week.

The letter was written by Democratic Reps. Josh Gottheimer of New Jersey and Dean Phillips of Minnesota and addressed to Pelosi, McCarthy, and the chairwoman and ranking Republican member of the House Administration Committee, Reps. Zoe Lofgren of California and Rodney Davis of Illinois.

While the list was mostly signed by Democrats, one Republican signed onto the letter — Rep. Fred Upton of Michigan.

This comes after the Committee on House Administration sent a letter to members earlier this month reminding them of various options they had for security-related expenses "in light of the tragic events related to the seditious breach of the Capitol."

The January 11 letter circulated to members reminded them that in their districts, they can get reimbursed for having security at a district event or outside district offices.

The letter instructed members that the House Sergeant at Arms will provide "certain security enhancements" for district offices and that a bullet proof vest and security training are also considered reimbursable expenses.

Yogananda Pittman, the acting chief of the US Capitol Police, on Thursday called for permanent fencing and other enhanced security measures around the Capitol complex.

"In light of recent events, I can unequivocally say that vast improvements to the physical security infrastructure must be made to include permanent fencing, and the availability of ready, back-up forces in close proximity to the Capitol," Pittman said in a statement.

Pittman continued: "I look forward to working with Congress on identifying the security improvements necessary to ensure the safety and security of the Congress and the U.S. Capitol."

But lawmakers on both sides of the aisle pushed back on the idea of fencing around the Capitol.

Democratic Rep. Jake Auchincloss, a Massachusetts freshman, tweeted that it would be a "mistake to turn the home of our democracy into a fortress."

Rep. Elise Stefanik, a New York Republican, tweeted, "This is the People's House."

"I am adamantly opposed."

"There has been no threat briefing given to Members of Congress to justify this proposal."

Asked about Pittman's recommendations, Pelosi deputy chief of staff Drew Hammill said in a statement that "the Speaker looks forward to General Honoré's final assessment."

In her own statement after meeting with Honoré, Pelosi said his initial assessment "covered operational readiness, interagency cooperation, security infrastructure and the morale and readiness of institutional staff."

"As we consider the need for an emergency supplemental funding bill to meet institutional security needs, I want to thank the General for reviewing what is necessary for the Capitol Police to do their jobs," Pelosi said.

The acting head of the US Capitol Police told congressional members during a closed-door briefing Tuesday that the "department failed to meet its own high standards" on January 6 when a crowd of pro-Trump rioters overran the Capitol building.

Pittman called the insurrection a "terrorist attack" and offered her "sincerest apologies on behalf of the department," according to her prepared remarks during a briefing for lawmakers on the House Appropriations Committee with a number of agencies that had a role in security on January 6.

This story and headline have been updated with additional developments Thursday.

CNN's Clare Foran, Manu Raju, Zachary Cohen and Ryan Nobles contributed to this report.

https://www.cnn.com/2021/01/28/politics ... index.html
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CNBC

"Treasury yields rise as stocks climb, US fourth quarter GDP released"


Jesse Pound @jesserpound Vicky McKeever @vmckeevercnbc

Published Thu, Jan 28 2021

U.S. Treasury yields rose on Thursday morning as the fourth-quarter GDP reading for the United States came in lower than expected.

The yield on the benchmark 10-year Treasury note rose to 1.05%, while the yield on the 30-year Treasury bond declined to 1.811%.

Yields move inversely to prices.

The rise in yields also came as the stock market climbed broadly and after the Federal Reserve said Wednesday that it was keeping its benchmark interest rate anchored near zero.

Following the conclusion of its two-day meeting, the U.S. central bank also said it was maintaining its asset purchase program, which sees it buying at $120 billion of bonds a month.

“The economy is a long way from our monetary policy and inflation goals, and it’s likely to take some time for substantial further progress to be achieved,” Fed Chairman Jerome Powell said at his post-meeting news conference.

Policy will remain “highly accommodative as the recovery progresses,” he added.

Auctions were held held Thursday for $30 billion of 4-week bills, $35 billion of 8-week bills and $62 billion of 7-year notes.

— CNBC’s Patti Domm and Jeff Cox contributed to this article.

Data also provided by Reuters

https://www.cnbc.com/2021/01/28/us-bond ... -data.html
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REUTERS

"TREASURIES-U.S. yields climb, curve steepens, as markets reverse recent pullback"


By Gertrude Chavez-Dreyfuss

January 28, 2021

* U.S. 2020 growth falls, but Q4 GDP rises

* U.S. yield curve steepens

* U.S. 10-year break-even inflation back above 2%

* U.S. 7-year note auction shows decent results


NEW YORK, Jan 28 (Reuters) - U.S. Treasury yields rallied on Thursday, in tandem with gains on Wall Street, after fourth-quarter growth data for the world's largest economy was not as weak as initially feared, while initial weekly jobless claims were below forecast.

Even a strong U.S. 7-year note auction failed to push yields lower, as the market continued to reverse the Treasury rally that pushed long-dated yields to three-week lows for four straight days.

U.S. 10-year, 20-year, and 30-year yields fell before the economic data and rose after that, steepening the yield curve after flattening the last four sessions.

The spread between U.S. two-year and 10-year yields widened to 92.90 basis points.

Data showed U.S. gross domestic product grew at a 4% annualized rate in the 2020 fourth quarter, in line with economists' forecasts, although for whole of 2020, it contracted 3.5%, the worst since 1946.

However, investors focused instead on a possible economic recovery this year with additional fiscal stimulus and vaccine distribution.

Another report showed U.S. jobless claims were lower than expected at 847,000, compared with forecasts of 875,000.

"U.S. data was pretty decent today," said Justin Lederer, director, U.S. rates at Cantor Fitzgerald in New York.

"When we look at the bad news that has come over the last few weeks, whether it's weaker data or different strains of COVID, I think we are getting closer to a more positive environment," with vaccine rollouts and the fiscal stimulus, he said.

The overall economic outlook gets better "as we get away from the holidays and closer to springtime with more people going outside and COVID cases coming down," he added.

In afternoon trading, the U.S. benchmark 10-year yield rose to 1.056%, from 1.014% late on Wednesday.

It earlier fell below 1%, a three-week trough.

U.S. 30-year yields rose to 1.812% from Wednesday's 1.78%, after sliding to a three-week low of 1.755%.

U.S. 2-year yields were up at 0.121%, from 0.119% on Wednesday.

Kevin Flanagan, head of fixed income strategy at WisdomTree Asset Management, said the reflation trade has never really gone away despite the recent decline in yields.

"But often times you'll see it's two steps forward, one step back."

Thursday's record $62 billion 7-year note auction was well-received despite the issue size, with a high yield of 0.754%, lower than the "when-issued" level or consensus forecast at the bid deadline of 0.757%.

That suggested investors were willing to accept a lower-than forecast yield for the sale.

Total bids were a record $142.9 billion for a bid-to-cover ratio, a measure of investor demand, of 2.3, slightly below last month's 2.31 and much lower than the 2.46 average.

The auction largely benefited from the sell-off in Treasuries that cheapened the rates, attracting buyers.

Post-auction, U.S. 7-year yields rose to 0.741%, from 0.706% on Wednesday.

The break-even inflation rate on 10-year Treasury Inflation Protected Securities, a gauge of expected annual inflation over the next 10 years, rose to 2.04%, after dropping on Wednesday to below 2% for the first time since late December.

https://www.reuters.com/article/usa-bon ... SL1N2K32HR
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REUTERS

"GLOBAL MARKETS-Asian equities set to gain as short-squeeze subsides; dollar eases"


By Alwyn Scott

January 28, 2021

* Guard-rails on U.S. day traders ease hedge fund selling

* U.S. data shows recovery proceeding, but not too fast

* Dollar, Treasury prices decline a bit as fears subside


NEW YORK, Jan 28 (Reuters) - Asian stocks were set to rise on Friday after U.S. shares rallied and the dollar eased overnight, as fears of social-media driven hedge fund selling abated and the U.S. earnings season got off to a strong start.

Concern about a hedge-fund rout that gripped the market on Wednesday eased after trading platforms Robinhood and Interactive Brokers restricted trading in GameStop, BlackBerry and other stocks that soared this week on speculative retail buying.

"There seems to be a concerted effort to rein in some of this speculative behavior,” said Kyle Rodda, market analyst at IG Markets in Melbourne.

In early Asian trade, Australia’s S&P/ASX 200 benchmark was up 1.15%, Japan’s Nikkei futures rose 1.39% and Hong Kong’s Hang Seng index futures gained 1.47%.

On Wall Street, the Dow Jones Industrial Average rose 0.99%, the S&P 500 gained 0.98% and the Nasdaq Composite added 0.5%.

Stocks in Europe closed little changed as countries grappled with new variants of the coronavirus amid extended lockdowns that may weigh on near-term economic growth.

The broad FTSEurofirst 300 index added 0.01% to 1,554.45.

The dollar dipped as risk sentiment improved following fresh U.S. economic data showing jobless claims declined in the latest week and U.S. gross domestic product was not as bad as feared.

The U.S. economy contracted at its sharpest pace since World War Two in 2020 as COVID-19 ravaged restaurants and airlines, throwing millions of Americans out of work and into poverty.

But GDP grew at a 4% annualized rate in the fourth quarter, in line with economists’ forecasts.

The data “straddled a healthy middle ground that showed the U.S. economy continuing to recover” while not yet strong enough to undercut the need for another large fiscal stimulus, Rodda said.

The dollar index was down 0.156%, with the euro unchanged at $1.2121 in early Asian trading.

The greenback had been boosted earlier in the week by safe-haven buying on concerns that U.S. fiscal stimulus will be smaller than hoped and that COVID-19 will continue to spread as countries struggle to roll out vaccines.

The U.S. currency has rebounded from three-year lows touched earlier this month and the dollar index is up 0.50% this month after falling 6.75% last year.

But there were still concerns about fragile economies putting pressure on overall high valuations.

Stricter vaccine checks by the European Union and delivery hold-ups from AstraZeneca Plc and Pfizer Inc have slowed the rollout of shots.

Reporting by Alwyn Scott; editing by Richard Pullin

https://www.reuters.com/article/global- ... SL1N2K32FW
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