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TREASURIES-U.S. bond yields rise with Bunds before 30-year auction
March 9, 2017 / 4:24 PM / in 5 months

TREASURIES-U.S. bond yields rise with Bunds before 30-year auction

5 Min Read

    * Longer-dated U.S. yields reach 11-week highs
    * Rate-hike bets pin shorter-dated yields near 7-1/2 year
peaks
    * ECB signals less urgency for more monetary stimulus
    * Upcoming 30-year supply to sell at highest yield since
2014

 (Update market action, add background, quote)
    By Richard Leong
    NEW YORK, March 9 (Reuters) - U.S. Treasury yields rose on
Thursday with longer-dated yields  hovering at their highest
levels in about 11 weeks, in step with their German counterparts
ahead of a $12 billion sale of 30-year U.S. government bonds.
    Shorter-dated Treasury yields hovered at their highest in
more than 7-1/2 years on expectations the Federal Reserve will
raise interest rates at its policy meeting next week.    
    Longer-dated U.S. and German yields moved higher after
European Central President Mario Draghi acknowledged economic
improvement in the euro zone, which may warrant less support
down the road
    "Draghi removed some of his earlier cautious language. On
balance it seemed a little less dovish," said Mike Lorizio,
senior fixed income trader at Manulife Asset Management in
Boston.
    Draghi spoke to reporters after ECB pledged to keep up its
euro bond purchase program, currently worth 2.3 trillion euro,
to at least until the end of 2017 at its policy meeting.
    His comments, together with ECB's mild upgrade on its growth
and inflation outlook on the euro zone, spurred selling in
German Bunds, which spread to the Treasuries market, traders
said.
    Benchmark 10-year Treasury yield was up 3 basis
points at 2.583 percent after touching 2.589 percent which was
its highest level since Dec. 20, according to Reuters data.
    Two-year yield, which is most sensitive to
traders' view on Fed policy, was up nearly 2 basis points at
1.371 percent. It was a shade below Wednesday's 1.378 percent
which was last seen in August 2009.
    Interest rates futures implied traders priced in close to a
90 percent probability that the U.S. central bank will
raise interest rates by a quarter point to 0.75-1.00 percent at
its two-day meeting that begins next Tuesday, according to CME
Group's FedWatch program.
    In "when-issued" activity, traders expected the upcoming
30-year bond supply to sell at a yield of 3.180 percent,
Tradeweb data showed. This would be the highest yield at a
30-year auction since September 2014.
    The 30-year bond sale will complete this week's $56 billion
auctions of coupon-bearing U.S. government debt.
March 9 Thursday 10:59AM New York / 1559 GMT
                               Price                  
 US T BONDS JUN7               147-8/32     -0-21/32  
 10YR TNotes JUN7              122-228/256  -0-64/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.715        0.7262    -0.003
 Six-month bills               0.86         0.8757    0.008
 Two-year note                 99-134/256   1.3706    0.017
 Three-year note               99-214/256   1.6813    0.021
 Five-year note                98-224/256   2.1145    0.033
 Seven-year note               98-48/256    2.4089    0.032
 10-year note                  97-24/256    2.5834    0.032
 30-year bond                  96-172/256   3.173     0.028
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        32.25         1.00    
 spread                                               
 U.S. 3-year dollar swap        24.00         1.25    
 spread                                               
 U.S. 5-year dollar swap         9.25         1.25    
 spread                                               
 U.S. 10-year dollar swap       -3.75         1.00    
 spread                                               
 U.S. 30-year dollar swap      -39.25         1.50    
 spread                                               
 
    
    

    
 (Reporting by Richard Leong; Editing by Alistair Bell)
  

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