Bonds Remain Quietly Mixed After Data

U.S. Treasuries were little changed Tuesday with the long bond underperforming in quiet trade in the wake of Tuesday’s data. Data showed the deficit widened in October, Q3 productivity was unrevised while unit labor costs were revised upward and and October factory orders rose in line with consensus.

The 30-year recently traded 3.06% from an overnight low yield/high price at 3.047% and 3.055% close Monday. The 10-year is near 2.378% from a high of 2.374% and a 2.387% close. The five-year was near 1.827% having hit 1.8225% overnight from 1.844%. The two-year recently traded 1.116% versus a 1.124% close.

The curve trade is mixed as well with the yield spread between the two- and 10-years steady near 1.26 plus while the five- and 30-year yield differential steepened to 1.23 from 1.21 plus.

Traders anticipate slowing volumes heading into the holidays with limited key data on the calendar and a run of central bank meetings ahead. At the Dec. 13 – 14 Federal Open Market Committee meeting a minimum 25 basis point rate increase is seen as a lock. CMEGroup fed fund futures have running just inside a 93% probability versus 95% Monday.

New issues include Federal Home Loan Bank is pricing a new global two-year note. PNC Bank is offering benchmark sized two-year fixed and floating-rate notes (FRN) as well as a five-year. Energy companies have Pemex has a benchmark multi-tranche deal including five-year fixed and FRNs as well as a 10-year. Chesapeake Energy is selling $750 million in eight-years, while there is also a $600 million eight-year from Parsley Energy.

By BDL Contributor