* Uncertainty over Trump, Fed, Europe push Treasury yields
* 5-year yields hit lowest since December
* 7- and 10-year yields hit lowest since mid-January
By Dion Rabouin
NEW YORK, Feb 8 U.S. Treasury yields fell to
their lowest levels in multiple weeks on Wednesday with 5-year
note yields hitting their lowest since Dec. 8 as a flight to
safety and technical positioning encouraged investors to buy
U.S. government debt.
Yields on 7-, 10- and 30-year Treasuries fell to their
lowest levels since mid-January.
Buying has picked up this week as analysts say the market is
reducing its expectations of the number of forthcoming interest
rate hikes from the U.S. Federal Reserve and of fiscal stimulus
policies and tax cuts from the administration of President
Uncertainty about European politics also sent a wave of
overseas buyers to Treasuries, which offer a sizeable yield
premium over government bonds from countries in Europe.
"Overseas there's this issue of political risk, most notably
France, Germany and Italy, on the rise," said Stan Shipley, a
strategist at Evercore ISI. "This is about the problems of the
French presidential election, Merkel's fall in her polls and all
Recent polls have shown German Chancellor Angela Merkel
falling behind the country's Social Democratic Party candidate
ahead of this year's elections. Polls have also suggested
France's Marine Le Pen, who has championed pulling the country
out of the European Union, is gaining steam. Italian markets
have been shaken since a vote late last year against Prime
Minister Matteo Renzi's constitutional reform referendum that
sent him out of office.
"People are saying I don't know what's going on over in
Europe and I want to get into something safer, most notably U.S.
Treasuries," Shipley said.
He also noted that benchmark 10-year note yields have
drifted below their 50-day moving average and a couple key
technical levels, increasing buying.
Additionally, Treasuries have been heavily correlated to
movements in the Japanese yen. The yen has been a
traditional safe-haven currency that investors have flocked to
in times of uncertainty as they unwind bullish bets.
The dollar was down half a percent against the yen, nearing
its lowest against the Japanese currency since late November.
Market participants are also looking to Wednesday's U.S.
Treasury auction of $23 billion of 10-year notes at 1 p.m. (1800
The 10-year note was last up 11/32 in price to
yield 2.349 percent, down 4 basis points from its late Tuesday
(Reporting by Dion Rabouin; Editing by Andrea Ricci)