UPDATE 1-Investors shed safe-haven German Bunds as ECB fortifies the euro zone

* German 30-year yields rise to five-month high

* Long-end Italy/Germany spread at tightest since March

* U.S. payroll numbers show 2.5 mln jobs added

* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Adds graphic, updates prices)

By Abhinav Ramnarayan

LONDON, June 5 (Reuters) – Safe-haven German government bonds sold off for a second day on Friday, with yields reaching their highest levels in months, after the European Central Bank’s support for the euro zone helped boost sentiment towards the region.

Southern European borrowing costs fell further and the gap between long-dated Italian and German bond yields shrunk to its narrowest since the first coronavirus-related market rout in late March.

The ECB approved a bigger-than-expected expansion of its stimulus package on Thursday to prop up an economy plunged by the coronavirus pandemic into its worst recession since World War Two.

“If you think about what the ECB has done, it is dramatically supporting the euro through reducing tail risk. Peripheral spreads will keep tightening, especially at the long end,” said Peter Chatwell, Mizuho’s head of rates.

The gap between Italian and German 30-year bond yields was at its narrowest since March 27 at 211 basis points.

Long-dated 30-year German government bond yields rose six basis points to 0.24%, the highest level since January. The bonds were trading at a negative yield just 10 days ago.

“Yesterday, Christine (Lagarde) fired yet another bazooka – almost doubling the size of the purchase programme. That means a lot of support for Italy,” said Gregory Perdon, co-chief investment officer at Arbuthnot Latham.

Italy’s benchmark 10-year bond yields were at 1.42% on Friday, close to Thursday’s two-month low and half of mid-March’s level, when worries around the spread of the novel coronavirus were at their most elevated.

Greek 10-year yields were also at their lowest levels since March at 1.35%.

Employment data from the United States, meanwhile, showed over 2.5 million jobs being added, an improvement from a dire figure the month before and adding to the positive sentiment.

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UPDATE 1-Euro zone bond yields fall again; focus remains on virus, policy measures

* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Adds details, updates prices)

By Yoruk Bahceli

LONDON, May 14 (Reuters) – Euro zone bond yields fell further on Thursday as global markets remained wary of a second wave of coronavirus infections, while European analysts focused on the policy response to the pandemic.

New outbreaks of the coronavirus in South Korea and China aroused concern, sending global stock markets lower, as more countries begin to re-open their economies.

Safe-haven 10-year German bond yields fell 1 basis point to -0.54%. Italian 10-year bond yields were unchanged at 1.81% after falling to a near 10-day low at 1.79% earlier in the session.

“Swings in risk appetite after yesterday’s Mr. Powell’s cautious tones and more in general related to the developments of lockdown measures will remain an important driver,” UniCredit’s analysts told clients, citing a light data calendar on Thursday. U.S. Federal Reserve Chairman Jerome Powell warned of the worst recession since World War Two on Wednesday.

The European Central Bank released its latest economic bulletin, where it reiterated the message that it stands ready to do everything necessary to support the euro area during the coronavirus crisis. It said it is fully prepared to increase the size of its emergency bond purchases and adjust their composition by as much as necessary and for as long as needed.

Germany’s constitutional court last week gave the ECB three months to explain the proportionality of its bond purchases or risk losing Germany’s Bundesbank as a participant in the programme.

Analysts are also expecting the release of the tax intake forecast of the German government’s tax experts.

Germany’s federal and state governments are likely to get about 100 billion euros less in tax revenues this year than previously estimated and the deficit is likely to reach 300 billion euros by 2024, the newspaper Bild reported on Monday.

No increase in taxes or contributions are being planned to finance the costs of dealing with the coronavirus, Chancellor Angela Merkel said on Wednesday.

Merkel also said that Germany would act wisely in response to the court ruling against the ECB’s flagship stimulus programme and would use the decision as impetus to drive closer euro zone economic policy coordination.

ECB policymaker Luis de Guindos is also scheduled to speak later in the session and is expected to reiterate the message that the ECB is ready to provide more stimulus if necessary.

In the primary market, Ireland sold 1.5 billion euros of nine and 30-year bonds in an auction on Thursday. (Reporting by Yoruk Bahceli, editing by Larry King and Gareth Jones)

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Asia's high yield debt market starts to thaw

HONG KONG/SINGAPORE, May 14 (Reuters) – The first high yield debt deal in Asia for nearly two months was underway on Thursday as China’s Zhenro Properties Group looked to raise $200 million in a transaction that bankers predict could prompt more junk bond deals to emerge in the region.

A term sheet seen by Reuters showed Zhenro was selling a 3.8 year fixed deal of $200 million, rated B+ by Fitch with a price of about 8.9%, to pay down some existing debt.

The deal is the first in the high yield sector in Asia since March, according to Refinitiv data, and could pave the way for other high-yield issuers to sell debt in the region, bankers said.

However, the relatively modest deal size and the long gap in activity in Asia’s junk credit markets underscore investor caution in the absence of the sort of central bank support seen in Europe and the United States.

Asia high yield debt issuance so far in 2020 has totaled $23.38 billion, down from $74.9 billion during the same time last year, according to Dealogic data.

In the same timeframe, there has been $127.6 billion worth of deals carried out in the U.S., the figures showed. “The sentiment in the market has come back and the secondary trading levels are back to a more respectable level,” said one banker with direct knowledge of the deal who could not be named because he wasn’t authorised to speak with the media.

“I think investors who are interested in the Chinese property sector are keen to look at it again, we have had some reverse interest as to when the high yield deals could come back.”

The rush of U.S corporate debt deals, in both investment grade and high-yield sectors, has been attributed to bond-buying programs from the U.S. Federal Reserve and the European Central Bank which have expanded to include corporate debt.

In the United States, even hard-hit cruise liners have been able to raise billions this month with the latest being Royal Caribbean Cruises’ $3.3 billion bond offer on Wednesday.

“First-time high yield issuers coming back into (Asia’s) market will find it tough,” said Clifford Lee, head of fixed income at Singapore’s DBS Bank.

“If they do come back, I feel that they will come back in the shorter-tenor space … because they don’t want to pay the kind of premium we’re seeing now in the market.” (Reporting by Scott Murdoch in Hong Kong and Tom Westbrook in Singapore Editing by Shri Navaratnam)

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TREASURIES-Yields fall as investors wait for effective response

    By Ross Kerber
    BOSTON, April 21 (Reuters) - Safety-seeking investors pushed
down U.S. Treasury yields on Tuesday, with the five-year note
hitting a new record low, as the difficulties of restarting the
U.S. economy amid the COVID-19 pandemic sank in.
    The benchmark 10-year yield was down 8 basis
points in morning trading at 0.5456%. The yield on the five-year
note also sank and at one point was at 0.301%, its lowest ever.
    Seaport Global Holdings managing director Tom di Galoma said
the trading reflected a basket of worries, including lower oil
prices and a resulting hit to stock values stemming from
wholesale closures of American cities and states.
    "It's a continued flight to quality. Investors are looking
for a safety asset, and Treasuries happens to be that," di
Galoma said. 
    A potential spending deal in Congress could help improve
investors' mood, he said, but the bigger need is for officials
to arrange for things like reliable and widespread virus tests
so that major parts of the U.S. economy can be reopened quickly.
     U.S. Senate Democratic Leader Chuck Schumer said on Tuesday
he thinks Republicans and Democrats have agreed on a fourth
coronavirus spending bill, and that the Trump administration has
also agreed to a national testing strategy.
    But U.S. stock index futures were down on gloomy quarterly
earnings reports and oil price trends.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, seen as an indicator of economic
expectations, was at 35 basis points, about 8 basis points lower
than at Monday's close. 
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down 1.5
basis points at 0.1873% in morning trading.
    
      April 21 Tuesday 9:07AM New York / 1307 GMT
                               Price                  
 US T BONDS JUN0               182-31/32    2-7/32    
 10YR TNotes JUN0              139-168/256  0-140/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1125       0.1144    -0.013
 Six-month bills               0.1375       0.1395    -0.010
 Two-year note                 100-93/256   0.1873    -0.015
 Three-year note               100-20/256   0.2237    -0.029
 Five-year note                100-244/256  0.3054    -0.047
 Seven-year note               101-60/256   0.4442    -0.064
 10-year note                  109-28/256   0.5456    -0.080
 30-year bond                  122          1.1289    -0.106
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        21.75         0.00    
 spread                                               
 U.S. 3-year dollar swap        15.00         0.25    
 spread                                               
 U.S. 5-year dollar swap        11.75         0.25    
 spread                                               
 U.S. 10-year dollar swap        7.00         0.75    
 spread                                               
 U.S. 30-year dollar swap      -37.50         0.75    
 spread                                               
 

 (Reporting by Ross Kerber in Boston; editing by Jonathan Oatis)
  

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TREASURIES -Prices pare gains after U.S. data; yields edge up from lows

NEW YORK, April 16 (Reuters) – U.S. Treasury prices pared gains on Thursday, lifting yields from their lows, after a mixed set of U.S. economic data that were not as dire as many in the market feared.

The number of U.S. initial claims for jobless benefits fell to 5.245 million last week from a slightly revised 6.615 million the week before. But U.S. housing numbers were worse than expected, along with the Philadelphia Fed business conditions index which was the lowest since 1980.

In early morning trading, U.S. 10-year yields fell to 0.617%, from 0.641% late on Wednesday. Ten-year yields were at 0.611% before the data.

Yields on U.S. 30-year bonds were at 1.238%, down from 1.275% on Wednesday. Prior the data’s release, 30-year yields were at 1.234%. (Reporting by Gertrude Chavez-Dreyfuss Editing by Chizu Nomiyama)

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UPDATE 1-Eurozone yields steady as U.S. fiscal boost soothes nerves

* Italy/Germany bond yield gap well off highs

* U.S., European fiscal stimulus give heart to investors

* But lock downs could severely hurt global economy

* Eurozone periphery bond yields tmsnrt.rs/2ii2Bqr (Adds Coronabond comments from ECB’s Lagarde, quote, updates prices)

By Abhinav Ramnarayan

LONDON, March 25 (Reuters) – Eurozone government bonds steadied on Wednesday after policymakers in Europe and the United States approved extraordinary measures to lessen the impact of the coronavirus crisis, although stock markets suffered some losses.

The closely-watched spread between Italian and German 10-year yields was a few basis points tighter at 185 basis points, well off last week’s 14-month highs of 319 bps.

“That spread volatility should continue to stabilise from the highs we have seen recently after quite swift responses from the U.S.,” said DZ Bank rates strategist Christian Lenk.

U.S. senators and officials in President Donald Trump’s administration agreed on a massive economic stimulus bill to alleviate the economic impact of the coronavirus outbreak.

Meanwhile, European Central Bank (ECB) head Christine Lagarde asked euro zone finance ministers on Tuesday to seriously consider a one-off joint debt issue of “coronabonds” to help fight the epidemic, two officials said.

Germany’s 10-year government bond, the benchmark for the region, saw its yield edge a basis points higher to -0.31%, a move mirrored by other high-grade government bonds. ,

Italian 10-year borrowing costs were unchanged at 1.59%; nearly half last week’s high of 3.01%.

Other government bond markets referred to as peripheral, such as Spain, saw a pick-up in demand and were 4-6 bps lower across the curve.,

“Risk assets bounced yesterday in the aftermath of positive noises for the U.S. fiscal deal’s progress and the Fed’s commitment to buy unlimited U.S. Treasuries and MBS,” Mizuho analysts said in a note.

However, analysts said the relative calm depended on the success of the battle to contain the spread of the coronavirus, and also on how long lockdowns continue and the potential impact on supply chains and industry.

“Even the boldest measures announced are likely to do no more than put the economy on ice,” Richard McGuire, a strategist at Rabobank, said.

Surveys this week showed business activity collapsed from Australia, Japan and Western Europe to the United States at a record pace in March as measures to contain the coronavirus pandemic hammered the world economy. (Reporting by Abhinav Ramnarayan; editing by Barbara Lewis and Alexander Smith)

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