* Worries about yuan, "hard Brexit" spur safety bids for
* U.S. to sell $56 billion in longer-dated government debt
* Fed's Rosengren calls for gradual but faster rate
(Adds new analyst comments, updates prices)
By Richard Leong
NEW YORK, Jan 9 U.S. Treasury yields fall on
Monday as nervousness about the Chinese yuan and Britain's exit
from the European Union rekindle safe haven demand for low-risk
government bonds ahead of this week's $56 billion supply.
A falling Chinese currency has stoked worries about the
country's capital outflows. On Saturday, the government said
foreign exchange reserves fell to near a six-year low at the end
China's offshore yuan weakened a bit against the dollar on
Monday following a large increase last week amid speculation the
Chinese central bank pushed up overnight borrowing costs to
quell bearish bets on the currency.
"People are worried what China is going to do next," said
Thomas Roth, senior Treasury trader at MUFG Securities America
in New York.
Comments from British Minister Theresa May revived fears
about a "hard Brexit," in which border controls will be given
priority over market access.
May said in a television interview on Sunday she was not
interested in Britain keeping "bits" of its EU membership.
The yield on the benchmark 10-year Treasuries
was down 3 basis points at 2.385 percent, while the 30-year bond
yield was 3 basis points lower at 2.975 percent.
Monday's decline in yields was mitigated as some investors
prepared for this week's supply in longer-dated government
bonds: $24 billion in three-year notes, $20 billion in 10-year
debt and $12 billion in 30-year bonds.
A solid U.S. December jobs report has reinforced the view
the Federal Reserve might raise interest rates at a
faster-than-expected pace in 2017.
Boston Fed President Eric Rosengren said on Monday, "I
expect that appropriate monetary policy will need to normalize
more quickly than over the past year."
January 9 Monday 11:30AM New York / 1630 GMT
US T BONDS MAR7 152-16/32 0-23/32
10YR TNotes MAR7 124-180/256 0-76/256
Price Current Net
Yield % Change
Three-month bills 0.4975 0.505 -0.015
Six-month bills 0.57 0.5795 -0.030
Two-year note 100-24/256 1.2017 -0.016
Three-year note 99-190/256 1.4651 -0.019
Five-year note 100-130/256 1.8925 -0.030
Seven-year note 100-96/256 2.1917 -0.036
10-year note 96-160/256 2.3865 -0.032
30-year bond 98-4/256 2.9757 -0.027
DOLLAR SWAP SPREADS
Last (bps) Net
U.S. 2-year dollar swap 27.50 0.50
U.S. 3-year dollar swap 21.50 0.25
U.S. 5-year dollar swap 3.75 0.50
U.S. 10-year dollar swap -12.75 0.25
U.S. 30-year dollar swap -49.00 0.00
(Reporting by Richard Leong)