* Investors wary of developments in Europe, Syria, North
* U.S. sells $24 billion 3-year notes to lowest bids since
* Fed could begin balance sheet wind-down by year-end
* Yellen to speak on policy at U. Michigan at 4:10 p.m. EDT
(Update market action, add quote)
By Richard Leong
NEW YORK, April 10 U.S. Treasury yields fell on
Monday as jitters about the French presidential election,
concerns about North Korea and tension between U.S. and Syria
underpinned safe-haven demand for U.S. government debt.
On the other hand, reduced trading volume because of
Passover and Easter holidays this week may end up depressing
bids for the $56 billion worth of coupon-bearing Treasuries,
"You are getting some safe-haven bids on geopolitical
concerns," said Guy LeBas, chief fixed income strategist at
Janney Montgomery Scott in Philadelphia.
Polls released on Monday showed a tight first-round French
presidential contest on April 23, led by anti-EU, anti-immigrant
National Front candidate Marine Le Pen and centrist Emmanuel
Macron. They indicated Macron would beat Le Pen in a May 7
The possibility of a Le Pen victory has raised fears that
France, the euro zone's second-biggest economy, might withdraw
from the currency bloc.
In the Middle East, U.S. President Donald Trump is open to
additional strikes on Syria following last week's missile
assault in response to civilians killed by chemical attacks by
Syria's military, a White House spokesman said.
Unfounded rumors about military maneuvers in the Korean
peninsula amid concerns about North Korea's advancing weapons
program caused a brief dip in stock prices and bond yields to
session lows, traders said.
The decline in bond yields was limited by poor demand at a
$24 billion three-year note auction where the bid-to-cover ratio
was the weakest since July 2009.
The U.S. Treasury Department will sell $20 billion of
10-year notes on Tuesday and $12 billion of 30-year bonds on
The yield drop was also mitigated by the possibility the
U.S. central bank will begin paring reinvestments into
Treasuries and mortgage-backed securities.
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.
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. (2010 GMT).
The yield on the benchmark 10-year Treasury was
2.362 percent, down 1 basis point from late on Friday, while the
yield on 30-year was 1 basis point lower at 2.988
U.S. financial markets will close on the Good Friday
April 10 Monday 3:21PM New York / 1921 GMT
US T BONDS JUN7 151-24/32 0-8/32
10YR TNotes JUN7 124-232/256 0-24/256
Price Current Net
Yield % Change
Three-month bills 0.7925 0.805 -0.015
Six-month bills 0.9375 0.9549 0.003
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 99-164/256 2.1808 -0.011
10-year note 99-4/256 2.3625 -0.010
30-year bond 100-60/256 2.988 -0.009
DOLLAR SWAP SPREADS
Last (bps) Net
U.S. 2-year dollar swap 31.75 -1.00
U.S. 3-year dollar swap 26.50 -1.50
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 and Steve