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TREASURIES-U.S. yields little changed ahead of bond sales
March 6, 2017 / 4:41 PM / 7 months ago

TREASURIES-U.S. yields little changed ahead of bond sales

    * U.S. to sell $56 billion in coupon-bearing debt
    * Futures imply traders see Fed hiking rates next week
    * Spec net shorts in 10-year T-notes hit record high -CFTC

    By Richard Leong
    NEW YORK, March 6 (Reuters) - U.S. Treasury yields were
little changed on Monday with two-year yields holding below a
7-1/2 year peak, as investors made room for this week's hefty
sale of government and corporate bonds.
    Investors were also digesting a sharp spike in yields
spurred by a barrage of remarks from Federal Reserve officials
including Fed Chair Janet Yellen, which led traders to perceive
that the central bank will increase interest rates by a quarter
of a percentage point at its policy meeting next week.

    "The data kept coming in positive and they fanned up the
rate expectations of some members," Blake Gwinn, U.S. rates
strategist at NatWest Markets in Stamford, Connecticut.
    The latest upbeat news was a second month of an increase in
domestic factory orders in January.
    There is a chance the Fed might back away from a rate hike
if the February jobs report due on Friday comes in much weaker
than forecast, but for now, traders see a rate increase is
almost a done deal. 
    Interest rates futures implied traders placed nearly an 89
percent chance the Fed will raise interest rates at its upcoming
meeting, up from 80 percent at Friday's close, CME
Group's FedWatch tool showed.
    Speculators also ratcheted up their bets on rising bond
yields with data showing their net bearish bets on 10-year
Treasury note futures reaching a record high last week,
according to data from the Commodity Futures Trading Commission.

    The benchmark 10-year Treasury yield was little
changed at 2.498 percent, while the 30-year bond yield
 rose 2 basis points to 3.101 percent.
    The two-year yield, which is most sensitive to
traders' view on Fed policy, edged up marginally to 1.313
percent. It hit 1.345 percent on Friday which was its highest
intraday level since August 2009.
    A drop in stock prices in the aftermath of North Korea
firing four ballistic missiles and U.S. President Donald Trump's
accusation that his predecessor Barack Obama wiretapped him
stoked some safety bids for Treasuries.
    In the meantime, investors will focus on this week's bond
auctions.
    The Treasury Department will sell $24 billion in three-year
notes on Tuesday; $20 billion in 10-year debt on Wednesday and
$12 billion in 30-year bonds on Thursday.
    Companies were expected to sell $35 billion of
investment-grade bonds in the U.S. corporate bond market this
week, according to IFR, a Thomson Reuters unit.

    
March 6 Monday 11:02AM New York / 1602 GMT
                               Price                  
 US T BONDS JUN7               148-31/32    -0-9/32   
 10YR TNotes JUN7              123-148/256  0         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.72         0.7313    0.025
 Six-month bills               0.83         0.845     0.013
 Two-year note                 99-162/256   1.3134    0.008
 Three-year note               99-100/256   1.5875    0.002
 Five-year note                99-80/256    2.0207    0.004
 Seven-year note               98-192/256   2.3199    0.003
 10-year note                  97-212/256   2.4979    0.006
 30-year bond                  98-8/256     3.1013    0.018
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        32.75        -1.50    
 spread                                               
 U.S. 3-year dollar swap        26.75        -1.00    
 spread                                               
 U.S. 5-year dollar swap        10.00        -1.25    
 spread                                               
 U.S. 10-year dollar swap       -4.25        -1.50    
 spread                                               
 U.S. 30-year dollar swap      -40.25        -1.50    
 spread                                               
 
    

    
 (Reporting by Richard Leong Editing by W Simon)
  

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