TREASURIES-Yields rise as stock gains reduce demand for U.S. bonds
U.S. Treasury yields rose from five-month lows on Monday as stocks gained, reducing demand for safe-haven debt, and on reports that the Trump administration is likely to nominate a bank friendly official as the Federal Reserve’s vice chairman for bank supervision. U.S. stocks were on track to snap a three-day losing streak on Monday as investors turned their attention to the
first-quarter earnings season. The Wall Street Journal and Bloomberg News were among publications reporting that Randal Quarles, a former top Treasury Department official during the Bush administration, is expected to be nominated to the Fed’s bank supervisory role. "The feeling is that he might start pushing through some regulations that might help the banking sector, and take the pressure off yields moving lower," said Tom di Galoma, a managing director at Seaport Global Holdings in New York. Benchmark 10-year notes were last down 7/32 in price to yield 2.252 percent, after dropping to 2.198 percent overnight, the lowest since Nov. 17. Bonds extended price losses after the Financial Times quoted U.S. Treasury Secretary Steven Mnuchin saying that he expects tax reform this year, though the prior August timeline is "not realistic."
Theresa May Seeks Snap U.K. Election to Get Brexit Backing
U.K. Prime Minister Theresa May said she will seek an early election on June 8, in an unexpected gamble aimed at strengthening her hand going into talks on leaving the European Union. The surprise statement came less than a month after she triggered the formal start of Brexit and marks a reversal of her position before the Easter break, when her office insisted an early election wasn’t on the cards. An election isn’t due until 2020 though her popularity — polls show her Conservative Party is more than 20 points ahead of the main opposition — give her an opening to consolidate her power. The risk is that the election emboldens those who regret voting for Brexit in last year’s referendum or increases support for independence in Scotland. In her statement, May was clear that she was seeking a mandate for her negotiating stance and markets took the premier at her word. The pound surged to its highest since Feb. 2 on the expectation that May will be able to secure a larger majority than the razor-thin one she inherited from David Cameron — and that it will strengthen her hand during Brexit negotiations.
Manufacturing and retail recovery drives China’s solid Q1 growth
A recovery in China’s industrial sector, which accounts for about one-third of the economy, drove China’s better-than-expected first quarter economic growth as export orders picked up and steel output hit a record. Data on Tuesday from the National Bureau of Statistics showed the industrial sector grew 6.5 percent in the first quarter from a year earlier, its fastest pace since the fourth quarter of 2014. On Monday, China reported first quarter growth of 6.9 percent, the quickest in six quarters. Within the industrial sector, manufacturing grew 7.0 percent compared with the first quarter last year. Analysts credited growth in exports, in contrast to a contraction in the first three months of 2016, for providing the pick-up in the first quarter. n"It looks to us like the acceleration in 1Q 2017 GDP growth came from electronics exports complementing the 4Q 2016 growth drivers, housing and infrastructure investment," Tim Condon, head of Asia research at ING, said in a note.