* U.S. 5-year note sale fetches solid investor demand
* Investors await clues on rates, balance sheet in Fed
(Updates market action, adds quote)
By Richard Leong
NEW YORK, May 24 U.S. Treasury yields held
steady on Wednesday and stuck in a narrow trading range for a
third consecutive day, as investors await clues on the timing of
the next rate increase and possible reduction in bond
reinvestment from the Federal Reserve.
The U.S. central bank will release the minutes from its May
2-3 policy meeting at 2 p.m. EDT (1800 GMT), which may offer
insight into its plan to further pare monetary stimulus.
"People are hitting the pause button to get more clarity
from the Fed," said Bill Merz, senior market strategist at U.S.
Bank in Minneapolis.
In the meantime, U.S. bond yields were pinned down by demand
for low-risk assets in the wake of Moody's downgrade of China
and the deadly suicide bombing in Manchester, England.
Solid demand at a $34 billion sale of a new five-year
Treasury notes, which was part of this week's $88
billion coupon-bearing Treasury supply, also kept a lid on
yields on Wednesday, analysts said.
The U.S. Treasury will complete this week's auctions with a
$28 billion sale of seven-year debt on Thursday.
In addition to Treasuries, investors were making room for a
hefty supply of corporate bonds, which has put upward pressure
on yields this week.
Companies have raised $33.15 billion in the U.S.
investment-grade bond market so far ahead of a three-day holiday
weekend, according to IFR, a Thomson Reuters unit.
In early afternoon trading, the benchmark 10-year Treasury's
yield was last at 2.287 percent, up slightly from
late on Tuesday, while the 30-year bond yield was
marginally lower at 2.941 percent, Reuters data showed.
The U.S. bond market will close early at 2 p.m. (1800 GMT) on
Friday and will be shut on Monday for the U.S. Memorial Day
Wednesday, May 24 at 1339 EDT (1739 GMT):
US T BONDS JUN7 153-12/32 0-3/32
10YR TNotes JUN7 125-220/256 0
Price Current Net
Three-month bills 0.915 0.9299 -0.007
Six-month bills 1.055 1.0754 -0.003
Two-year note 99-218/256 1.3254 0.006
Three-year note 100-4/256 1.4946 0.006
Five-year note 100-54/256 1.83 0.000
Seven-year note 99-96/256 2.0972 0.002
10-year note 100-200/256 2.2869 0.004
30-year bond 101-48/256 2.9401 -0.005
DOLLAR SWAP SPREADS
Last (bps) Net
U.S. 2-year dollar swap 22.00 -1.50
U.S. 3-year dollar swap 19.50 -0.25
U.S. 5-year dollar swap 7.00 0.25
U.S. 10-year dollar swap -6.00 0.25
U.S. 30-year dollar swap -44.00 1.50
(Reporting by Richard Leong; Editing by Lisa Von Ahn and Grant