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TREASURIES-U.S. bond yields steady ahead of 30-year Treasury sale
April 12, 2017 / 3:35 PM / 5 months ago

TREASURIES-U.S. bond yields steady ahead of 30-year Treasury sale

    * U.S. sells $12 billion 30-year bonds at 1 p.m. EDT
    * Worries about overseas conflicts underpin bond demand
    * U.S. bond market to close early at 2 p.m. EDT Thursday

    By Richard Leong
    NEW YORK, April 12 (Reuters) - U.S. Treasury yields were
little changed on Wednesday as safe-haven demand tied to
international political worries offset investor selling ahead of
a 30-year bond auction.
    Investor anxiety about possible U.S. military showdowns
against Syria and North Korea remained at elevated levels as
they piled into Treasuries, sending the 30-year yield to hover
above a near three-month low.
    "The geopolitical tension has not escalated, but it's not
going away either," said Mary Anne Hurley, vice president of
fixed income at D.A. Davidson in Seattle.
    U.S. President Donald Trump signaled he was open to more
strikes against Syria after he ordered a missile attack on a
Syrian air base in response to an alleged Syrian military
assault using poisonous gas that killed scores of civilian. 
    North Korea warned of a nuclear attack on the United States
for any sign of aggression as a U.S. Navy strike group was 
moving toward the Korean peninsula.
    Adding to investor worries was a tightening French
presidential race on April 23. Opinion polls stirred concern 
that hard-left candidate Jean-Luc Melenchon and far-right leader
Marine Le Pen could end up in a runoff next month.
    U.S. benchmark 10-year Treasury yields were
little changed at 2.300 percent, which analysts assessed as a
critical resistance level.
    The 30-year bond yield was flat at 2.933 percent
after falling to 2.915 percent earlier Wednesday, which was the
lowest since Jan. 17.       
    Following Tuesday's rally, it was unclear how aggressively
investors will bid for the upcoming $12 billion auction of
30-year bonds at 1 p.m. EDT (1700 GMT), the final leg of this
week's $56 billion coupon-bearing Treasury sale, traders said.
    "With (the) 30-year yield below 3 percent, there's not a lot
of desire to push it too far lower from here," Hurley said.
    In "when-issued" activity, traders expected the U.S.
Treasury Department to pay a yield of 2.939 percent on the
30-year supply. This compared with a 3.170
percent yield at the prior 30-year bond sale in March.
    The U.S. bond market will shut early at 2 p.m. EDT (1800
GMT) on Thursday ahead of the market holiday on Good Friday. 
  April 12 Wednesday 10:24AM New York / 1424 GMT
                               Price                  
 US T BONDS JUN7               152-29/32    -0-2/32   
 10YR TNotes JUN7              125-136/256  0-12/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.81         0.8229    0.000
 Six-month bills               0.9225       0.9397    -0.005
 Two-year note                 100-6/256    1.2378    0.004
 Three-year note               100-30/256   1.4598    -0.003
 Five-year note                100-60/256   1.8253    -0.007
 Seven-year note               100-36/256   2.1031    -0.007
 10-year note                  99-156/256   2.2944    -0.021
 30-year bond                  101-88/256   2.932     0.002
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        32.50         0.25    
 spread                                               
 U.S. 3-year dollar swap        25.50         0.50    
 spread                                               
 U.S. 5-year dollar swap        10.50         0.50    
 spread                                               
 U.S. 10-year dollar swap       -3.50         0.75    
 spread                                               
 U.S. 30-year dollar swap      -40.25         0.25    
 spread                                               
 
     

 (Reporting by Richard Leong Editing by W Simon)
  

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