* Comey firing raises worries about Trump's economic agenda
* U.S. to sell $23 bln 10-year notes at 1 p.m. (1700 GMT)
By Richard Leong
NEW YORK, May 10 U.S. Treasury benchmark yields
retreated from a five-week peak on Wednesday as President Donald
Trump's firing of his FBI director spurred some concerns about a
political storm that could hinder Trump's economic agenda.
Trump's abrupt dismissal of FBI Director James Comey drew a
storm of criticism that the move was intended to blunt the
agency's probe into his presidential campaign's possible
collusion with Russia to sway last year's election.
"Anything that could dent his economic agenda from passing
would give investors pause," said Craig Dismuke, chief economist
at Vining Sparks in Memphis.
The drop in U.S. yields was limited by some investors
selling to prepare for the $23-billion auction of 10-year
Treasury notes at 1 p.m. (1700 GMT), the second leg of this
week's $62 billion in supply from the May refunding.
Competition from a growing pipeline of higher-yielding
corporate bonds also stemmed a further decline in Treasury
yields. Companies have raised more than $23 billion with
investment-grade bonds so far this week, according to IFR, a
Thomson Reuters unit.
On the data front, the Labor Department said U.S. import
prices grew 0.5 percent in April, which was above forecast and
marked a fifth straight month of increase.
The benchmark 10-year Treasury yield slipped 3
basis points to 2.376 percent, below a five-week high of 2.416
percent reached on Tuesday.
The 30-year bond yield declined 3 basis points
to 3.009 percent, retreating from the 3.047 percent struck on
Tuesday, which was its highest level since March 31.
With revived demand for Treasuries, analysts expected the
10-year auction to fare better than the $24 billion three-year
note sale on Tuesday which was hurt by growing conviction the
Federal Reserve will likely raise interest rates at its next
policy meeting in June.
In "when-issued" activity, traders expected the upcoming
10-year note to sell at a yield of 2.367 percent
, compared with 2.332 percent at the prior
10-year auction in April, Tradeweb data showed.
"Seasonals are strong and the 10-year is more insulated than
the front-end from a hawkish Fed," BMO Capital Markets interest
rates strategist Aaron Kohli wrote in a research note.
Interest rates futures implied traders saw an 88 percent
that the Fed would raise its benchmark overnight rate by a
quarter of a percentage point to a range of 1.00 percent to 1.25
percent at its June 13-14 policy meeting, little
changed from Tuesday, according to CME Group's FedWatch tool.
May 10 Wednesday 10:17AM New York / 1417 GMT
US T BONDS JUN7 151-8/32 0-16/32
10YR TNotes JUN7 125-32/256 0-76/256
Price Current Net
Yield % Change
Three-month bills 0.8925 0.9069 -0.008
Six-month bills 1.015 1.0344 0.000
Two-year note 99-212/256 1.3386 -0.016
Three-year note 99-226/256 1.5401 -0.030
Five-year note 99-226/256 1.8998 -0.035
Seven-year note 98-212/256 2.1821 -0.037
10-year note 98-236/256 2.3742 -0.033
30-year bond 99-220/256 3.007 -0.032
DOLLAR SWAP SPREADS
Last (bps) Net
U.S. 2-year dollar swap 25.50 -1.50
U.S. 3-year dollar swap 21.25 -2.50
U.S. 5-year dollar swap 7.25 -0.75
U.S. 10-year dollar swap -8.00 -0.75
U.S. 30-year dollar swap -46.00 -0.75
(Reporting by Richard Leong; Editing by Nick Zieminski)