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TREASURIES-Benchmark yields hit multi-week lows on doubts over Trump agenda
April 4, 2017 / 7:56 PM / 6 months ago

TREASURIES-Benchmark yields hit multi-week lows on doubts over Trump agenda

    * 10-yr yields briefly fall to 2.314 pct, lowest since Feb.
24
    * Yields rise from lows on profit-taking, reinstated short
bets

 (Updates prices, adds analyst comment)
    By Sam Forgione
    NEW YORK, April 4 (Reuters) - Benchmark U.S. Treasury yields
touched their lowest in more than five weeks on Tuesday before
reversing course to trade little changed on doubts about the
ability of U.S. President Donald Trump to enact fiscal stimulus.
    Yields on benchmark 10-year notes dropped to 2.314 percent,
their lowest since Feb. 24, with analysts saying Trump's failure
to achieve passage of a bill to overhaul the U.S. healthcare
system last month could portend similar difficulties turning
campaign pledges, including tax reform, into successful 
legislation.
    Analysts also cited the looming U.S. Senate showdown over
Trump's Supreme Court nominee, Neil Gorsuch, as an additional
source of doubt the new administration will be able to achieve
its agenda. 
    Yields on seven- and five-year Treasuries also fell to more
than five-week lows of 2.123 percent and 1.840 percent,
respectively, while three-year yields touched Monday's nearly
five-week low of 1.437 percent. Yields on 30- and two-year
Treasuries did not breach Monday's lows. 
    "I do think politics is driving a lot of the uncertainty,"
said Ellis Phifer, market strategist at Raymond James in
Memphis, Tennessee.
    "You had a pro-growth agenda with a full power, and
obviously the power has been split," Phifer said in reference to
divisions between moderates and conservatives in the Republican
Party despite its control of both the White House and Congress.
    Analysts said traders reinstated short bets against
Treasuries or took profits on long positions once 10-year yields
neared a key resistance level of 2.31 percent. That led yields
to edge off their lows later in U.S. morning trading to last
stand little changed. 
    Some analysts said the bid for Treasuries was overdone,
leading to the selling pressure. 
    "The market is getting ahead of itself," said Charles
Comiskey, head of Treasuries trading at Bank of Nova Scotia in
New York, in reference to the drop in yields. "All you’re seeing
today is some profit-taking on longs." 
    U.S. 10-year notes were last down 1/32 in price
to yield 2.355 percent, from a yield of 2.350 percent late
Monday. 
    U.S. 30-year bonds were last down 7/32 in price
to yield 2.995 percent, from a yield of 2.984 percent late
Monday. Two-year notes last yielded 1.254 percent,
compared with 1.242 percent late Monday. 
    
  April 4 Tuesday 3:36PM New York / 1936 GMT
                               Price                  
 US T BONDS JUN7               151-20/32    -0-4/32   
 10YR TNotes JUN7              124-252/256  -0-12/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.79         0.8026    0.003
 Six-month bills               0.9025       0.9192    -0.005
 Two-year note                 99-254/256   1.254     0.012
 Three-year note               100-116/256  1.467     0.008
 Five-year note                99-244/256   1.8849    0.008
 Seven-year note               99-184/256   2.1686    0.008
 10-year note                  99-20/256    2.3551    0.005
 30-year bond                  100-20/256   2.9959    0.012
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        33.75        -1.50    
 spread                                               
 U.S. 3-year dollar swap        29.50        -1.50    
 spread                                               
 U.S. 5-year dollar swap        11.50        -0.75    
 spread                                               
 U.S. 10-year dollar swap       -1.75         0.00    
 spread                                               
 U.S. 30-year dollar swap      -39.00        -0.50    
 spread                                               
 
 (Reporting by Sam Forgione; Editing by Steve Orlofsky and Peter
Cooney)
  

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