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TREASURIES-U.S. bond yields hold steady before debt sales
March 6, 2017 / 7:57 PM / 9 months ago

TREASURIES-U.S. bond yields hold steady before debt sales

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

 (Updates market action, adds quote)
    By Richard Leong
    NEW YORK, March 6 (Reuters) - U.S. Treasury yields were
steady in a tight trading range 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 last week's sharp spike in
yields spurred by a barrage of remarks from Federal Reserve
officials including Fed Chair Janet Yellen, which led traders to
anticipate that the U.S. central bank will raise interest rates
by a quarter of a percentage point at its policy meeting next
week.
    "We had the big market move last week. Now everyone is
hunkering down before the jobs report," said Ellis Phifer,
senior market strategist at Raymond James in Memphis, Tennessee,
referring to the U.S. government's payrolls report due on
Friday.
    There is a chance the Fed might back away from a rate hike
if the February jobs report comes in much weaker than forecast,
but for now, traders see a rate increase as almost a done deal. 
    Interest rates futures implied traders priced in an 86
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 ratcheted up their bets on rising yields with
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 2.494 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 1.309
percent. It hit 1.345 percent on Friday, which was its highest
intraday level since August 2009.
    A drop in stock prices following 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 2:44PM New York / 1944 GMT
                               Price                  
 US T BONDS JUN7               149-1/32     -0-7/32   
 10YR TNotes JUN7              123-152/256  0-4/256   
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.7175       0.7287    0.023
 Six-month bills               0.8275       0.8424    0.010
 Two-year note                 99-164/256   1.3093    0.004
 Three-year note               99-104/256   1.582     -0.003
 Five-year note                99-86/256    2.0158    -0.001
 Seven-year note               98-200/256   2.315     -0.002
 10-year note                  97-220/256   2.4943    0.002
 30-year bond                  98-16/256    3.0997    0.017
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        33.25        -1.00    
 spread                                               
 U.S. 3-year dollar swap        27.00        -0.75    
 spread                                               
 U.S. 5-year dollar swap         9.75        -1.50    
 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 and Meredith
Mazzilli)
  

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