* U.S. to sell $24 billion 3-year notes at 1 p.m. EDT
* Fed could begin balance sheet wind-down by year-end
* Yellen to speak on policy at U. Michigan at 4:10 p.m. EDT
(Updates prices, adds comments)
By Richard Leong
NEW YORK, April 10 U.S. Treasury yields dipped
on Monday in advance of the government's $24 billion debt
auction, part of its $56 billion sale of notes and bonds this
Reduced trading volume due to Passover and Easter holidays
this week may end up depressing bids for the latest wave of
Treasuries, analysts said.
"The auctions this week are going to be a challenge," said
Sharon Stark, fixed income strategist at InCapital LLC in Boca
The U.S. Treasury Department will sell $20 billion in
10-year notes on Tuesday and $12 billion in 30-year bonds on
Geopolitical tension in the Middle East and the Korean
peninsula, following a somewhat weaker-than-expected March U.S.
jobs report released on Friday, has underpinned safehaven demand
for low-risk government debt, analysts said.
The decline in bond yields was limited by remarks from
Federal Reserve officials on the possibility the U.S. central
bank would begin paring reinvestments into Treasuries and
Earlier Monday, St. Louis Fed President James Bullard said
the Fed could begin winding down its $4.5 trillion balance sheet
later this year.
Wall Street's top banks see the central bank making such a
move in 2017, according to a Reuters poll conducted on Friday.
"The Fed is worried about complacency in the market. They
want to be as clear as possible and give the market plenty of
lead time," Stark said.
Investors await further clues on balance sheet normalization
from Fed Chair Janet Yellen who will participate in a discussion
on public policy at the University of Michigan at 4:10 p.m.
The benchmark 10-year Treasury yield was 2.364
percent, down 1 basis point from late on Friday, while the
30-year yield was 1 basis point lower at 2.988
In "when-issued" activity, traders expected the Treasury
will sell the upcoming three-year note at a yield
of 1.523 percent, compared with 1.630 percent at last month's
three-year auction, Tradeweb data showed.
U.S. financial markets will close on the Good Friday
April 10 Monday 10:45AM New York / 1445 GMT
US T BONDS JUN7 151-25/32 0-9/32
10YR TNotes JUN7 124-228/256 0-20/256
Price Current Net
Yield % Change
Three-month bills 0.8075 0.8203 0.000
Six-month bills 0.94 0.9575 0.005
Two-year note 99-242/256 1.2781 -0.008
Three-year note 100-92/256 1.4989 -0.005
Five-year note 99-226/256 1.8998 -0.011
Seven-year note 99-160/256 2.1832 -0.009
10-year note 99 2.3643 -0.009
30-year bond 100-64/256 2.9872 -0.010
DOLLAR SWAP SPREADS
Last (bps) Net
U.S. 2-year dollar swap 31.50 -1.25
U.S. 3-year dollar swap 26.00 -2.00
U.S. 5-year dollar swap 9.50 -1.00
U.S. 10-year dollar swap -3.75 -0.75
U.S. 30-year dollar swap -40.00 0.00
(Reporting by Richard Leong Editing by W Simon)