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TREASURIES-U.S. yields hit six-week lows as China plans tariff retaliation

Richard Leong

(Adds quote, table) NEW YORK, May 13 (Reuters) - U.S. Treasury yields fell to six-week lows on Monday as investors piled into low-risk assets after China announced plans to impose additional tariffs on U.S.-made goods in retaliation against a U.S. increase in duties on Chinese imports on Friday. China's finance ministry said earlier Monday it plans to set import tariffs ranging from 5% to 25% on 5,140 U.S. products on a target list worth about $60 billion. It said the tariffs will take effect on June 1. Beijing's response rattled already jittery investors who were caught off guard by last week's breakdown of efforts reach a trade deal between the world's biggest economic powers. Investors and analysts are assessing the impact from this round of tariffs on global business activities. "With rising protectionist measures, the damage to economic growth is increasing," said Stephen Gallagher, U.S. chief economist at Societe Generale in New York. Gallagher estimated the latest round of U.S. and Chinese tariffs may reduce global economic growth by 0.15%. At 10:05 a.m. (1405 GMT), the yield on the benchmark 10-year Treasury was 5.3 basis points lower at 2.4015% after touching 2.398%, the lowest since March 29. Ten-year yields fell below those on three-month Treasury bills. A sustained inversion of this part of the yield curve has preceded every U.S. recession in the past 50 years. As investors shifted money into Treasuries, yen, gold and other safe-haven assets, they pulled money out of stocks and other risky investments. Wall Street's main indexes fell sharply in early trading with the S&P 500 losing 2.06%. May 13 Monday 10:07AM New York / 1407 GMT Price

US T BONDS JUN9 149-14/32 25/3210YR TNotes JUN9 124-120/256 16/32Price Current NetYield % Change

(bps)

Three-month bills 2.37 2.4166 -0.012Six-month bills 2.36 2.4209 -0.022Two-year note 100-34/256 2.1803 -0.072Three-year note 99-242/256 2.1439 -0.070Five-year note 100-86/256 2.1781 -0.072Seven-year note 100-152/256 2.2822 -0.06410-year note 99-200/256 2.3997 -0.05530-year bond 100-172/256 2.8416 -0.031YIELD CURVE Last (bps) Net

Change (bps)

10-year vs 2-year yield 21.80 2.0030-year vs 5-year yield 66.30 4.05

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 8.25 -1.50

spread

U.S. 3-year dollar swap 5.25 -2.00

spread

U.S. 5-year dollar swap 2.50 -1.25

spread

U.S. 10-year dollar swap -3.50 -1.50

spread

U.S. 30-year dollar swap -28.00 -2.25

spread

(Reporting by Richard Leong)