* Data shows prices for services rose 0.3 percent last month
* 3-, 2-year yields briefly hit roughly one-month highs
* Traders await Fed statement Wednesday
* Treasury to sell $12 billion in 30-year bonds at 1 p.m. ET
By Sam Forgione
NEW YORK, June 13 Short-dated U.S. Treasury
yields briefly hit multi-week highs on Tuesday after data
showing rising U.S. services prices and as traders awaited more
supply, while caution ahead of Wednesday's Federal Reserve
statement prevented the move from gaining traction.
The Labor Department said prices for services rose 0.3
percent last month, driven by a 1.1 percent surge in the index
for final demand trade services, which measures changes in
margins received by wholesalers and retailers.
U.S. three-year Treasury yields hit 1.511
percent, their highest since May 16, while two-year yields
touched their highest in a month of 1.367 percent
after the data.
Yields eased from their session highs and were last roughly
unchanged from their levels as of late Monday, with three- and
two-year yields last at 1.500 percent and 1.359 percent,
Traders likely viewed the services price data as a harbinger
of stronger May consumer price index data, which is set for
release Wednesday, said John Herrmann, director of interest
rates strategy at MUFG Securities in New York.
That potential inflation pickup would come after recent
readings showing inflation moving away from the Fed's 2 percent
goal, which have been viewed as a potential obstacle to more
hawkish Fed policy.
The Fed is scheduled to release its decision at 2 p.m ET
(1800 GMT) on Wednesday at the conclusion of its two-day policy
meeting. Fed Chair Janet Yellen is due to hold a press
conference a half hour later. The Fed is widely expected to
raise its benchmark interest for the second time this year.
Herrmann of MUFG also said yields were pressured a bit
higher given the risk that the Fed could provide more detail on
its plans to shrink its bond portfolio.
"The markets have to build in a little bit of risk that the
Fed may say something about tapering tomorrow," he said.
The Treasury will sell $12 billion in 30-year bonds on
Tuesday at 1 p.m. ET (1700 GMT). U.S. 30-year yields were last
at 2.866 percent, compared to 2.868 percent late Monday.
Long-dated yields earlier hit 2.886 percent, their highest since
"Some of (the earlier move higher in yields) is just ahead
of the supply," said Justin Lederer, an interest rate strategist
at Cantor Fitzgerald in New York.
Benchmark 10-year Treasuries were last up 1/32
in price to yield 2.207 percent, compared to 2.213 percent late
June 13 Tuesday 11:03AM New York / 1503 GMT
US T BONDS SEP7 154-2/32 0-3/32
10YR TNotes SEP7 126-92/256 0-8/256
Price Current Net
Yield % Change
Three-month bills 0.9925 1.0088 0.003
Six-month bills 1.1125 1.1343 0.005
Two-year note 99-202/256 1.3592 0.000
Three-year note 100 1.5 -0.002
Five-year note 99-222/256 1.778 0.000
Seven-year note 99-224/256 2.0193 -0.003
10-year note 101-124/256 2.2074 -0.006
30-year bond 102-176/256 2.8656 -0.002
DOLLAR SWAP SPREADS
Last (bps) Net
U.S. 2-year dollar swap 19.75 0.75
U.S. 3-year dollar swap 17.50 -0.25
U.S. 5-year dollar swap 7.75 0.75
U.S. 10-year dollar swap -5.00 0.75
U.S. 30-year dollar swap -43.25 0.75
(Reporting by Sam Forgione; Editing by Andrea Ricci)