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REFILE-TREASURIES-U.S. yield rise takes a breather ahead of Fed rate decision
December 13, 2016 / 3:32 PM / a year ago

REFILE-TREASURIES-U.S. yield rise takes a breather ahead of Fed rate decision

(Refiles to fix formatting of table)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Dec 13 (Reuters) - U.S. Treasury yields slipped on
Tuesday, consolidating recent gains ahead of a widely-expected
interest rate increase from the Federal Reserve.
    "With the passage of event risk such as the ECB (European
Central Bank) decision last week and the conclusion of the Fed
meeting tomorrow, the prospect is for more consolidation in
Treasuries. That's what's happening right now," said Bruno
Braizinha, interest rates strategist at Societe Generale in New
    On Monday, benchmark U.S. 10-year yields struck more than
two-year highs above 2.50 percent, while those of 30-year bonds
climbed to about 17-month peaks.
    Braizinha believes there is further room for upside in
10-year yields, with Societe Generale forecasting them to hit
2.90 percent by the end of next year.
    "But it's not always a straight line," he added. "Investors
will be looking at the data front to see whether there is enough
to sustain this bearish and steepening momentum."
    Investors are also looking at the $12 billion U.S. 30-year
bond auction later on Tuesday. Analysts, however, were not so
optimistic about it especially after lackluster sales of
three-year and 10-year notes on Monday.
    "Heading into the long-end duration supply, we are slightly
cautious on demand," wrote Nomura Securities in a note. "The
30-year has been trading even richer than pre-election levels on
the curve."
    In addition, Nomura Securities pointed to uncertainties
about the expected Fed rate hike on Wednesday, which could also
keep some investors on the side lines. 
    In mid-morning trading, U.S. 10-year note prices 
were up 1/32, while the yield fell to 2.473 percent from 2.479
percent late on Monday. Earlier on Monday, the yield hit 2.528
percent, its highest level since Sept. 29, 2014, according to
Reuters data.
    U.S. 30-year bonds were up 6/32. The yield was
3.152 percent, compared with 3.162 percent on Monday.
    U.S. two-year notes were flat to lower, yielding
1.161 percent.

 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Paul Simao)

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