US yields mostly lower on Las Vegas shooting, Spain uncertainty

02 Oct, 2017

However, yields briefly edged higher after upbeat data on US manufacturing and construction spending, adding to a growing view that the US Federal Reserve could raise interest rates one more time before the end of the year.

Still, the overall market sentiment remained cautious.

"Treasuries are giving up some earlier gains on the releases, but the markets are trading mainly on the political headlines rather than the data," said rates strategist Aaron Kohli of BMO Capital Markets in New York.

Analysts said last week's optimism about US President Donald Trump's tax plan had also faded.

"The focus is off tax reform at the moment given the political uncertainty with the Spanish referendum and the unfortunate tragedy in Las Vegas," said interest rates strategist Gennadiy Goldberg of TD Securities in New York.

Violence erupted in Catalonia after its regional leader opened the door to a unilateral declaration of independence from Spain on Sunday as voters defied a police crackdown. According to regional officials, Catalonia voted 90 percent in favor of breaking away in a referendum that the Spanish government later declared illegal.

In the United States, some 50 people died and more than 400 were hurt when a 64-year-old gunman with an arsenal of at least 10 rifles fired on a Las Vegas country music festival on Sunday, raining down bullets from a 32nd-floor window for several minutes before killing himself.

The death toll, which police emphasized was preliminary, would make the mass shooting the deadliest in US history.

Political tension overshadowed strong US economic data.

The Institute for Supply Management index was at 60.8 in September, exceeding August's level of 58.8 and expectations for a reading of 58. The components of the index showed gains across the board.

US construction spending rebounded in August after two straight months of declines, boosted by increases in both private and public outlays. Construction spending rose 0.5 percent to $1.21 trillion.

In mid-morning trading, the benchmark 10-year US Treasury note yield was 2.324 percent, down from 2.326 percent from late on Friday, while the 30-year yield fell to 2.846 percent from 2.858 percent.

Copyright Reuters, 2017

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