November 20, 2018 / 7:22 PM / 6 months ago

TREASURIES-Yields decline as global equity rout sparks safety buying

 (Updates prices)
    * Sliding stocks boosts demand for Treasuries
    * Concerns about slowing global growth add to bond bid
    * Bond market closed Thursday, closes early Friday

    By Karen Brettell
    NEW YORK, Nov 20 (Reuters) - Benchmark U.S. Treasury yields
fell to seven-week lows on Tuesday as global stock market
declines boosted demand for safe haven debt, before giving up
some price gains as investors closed positions before Thursday's
Thanksgiving holiday.
    Stocks were hurt by worries over softening demand for Apple
Inc's          iPhone and corporate growth prospects, while oil
prices sank on concerns about rising global supply.             
    “The near-term guidance Treasuries are taking are from
broader risk assets, so they are certainly paying attention to
the fall in equities globally,” said Jon Hill, U.S. rates
strategist at BMO Capital Markets in New York.
    Benchmark 10-year notes             fell to 3.036 percent,
the lowest since Sept. 28, before rising back to 3.052 percent.
    Analysts attributed the rise off the yield lows to investors
closing trades with liquidity expected to decline before
Thursday's Thanksgiving holiday.
    The 10-year yields have declined from 3.25 percent on Nov. 7
and are at the low end of the range they have traded in since
the beginning of October.
    The bond market will be closed on Thursday and will close
early on Friday.
    Fears about slowing global growth have also boosted demand
for U.S. government bonds as investors contemplate how a
slowdown will impact further rate increases by the U.S. central
    “The background for a lot of what’s going on is a
reassessment of the Fed’s path of policy as it relates to the
growing concern about global growth as well as a potential
recession going into 2020 and 2021,” Hill said.
    Two-year note yields           , which are highly sensitive
to interest rates, have fallen to 2.791 percent from 2.977
percent on Nov. 8, and are trading near their lowest levels
since Sept. 18.
    Richard Clarida, the Fed's newly appointed vice chair, on
Friday noted there was “some evidence of global slowing,” adding
“that's something that is going to be relevant as I think about
the outlook for the U.S. economy."             
    Fed Chairman Jerome Powell said last Wednesday that softness
in housing and high levels of corporate debt had caught the
Federal Reserve's eye, even as a "really strong" U.S. economy
was likely to continue growing.             
    New York Fed President John Williams on Monday said that the
U.S. central bank was pushing ahead with gradual rate-hike plans
next month as it marches toward a more normal policy stance.

 (Editing by Bernadette Baum and Lisa Shumaker)
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