October 31, 2017 / 1:21 PM / a year ago

TREASURIES-Bonds steady ahead of refunding announcement, Fed meeting

    * Treasury expected to announce larger auction sizes
    * Fed meeting, tax bill in focus

    By Karen Brettell
    NEW YORK, Oct 31 (Reuters) - U.S. Treasury prices were
steady on Tuesday as investors awaited a busy three days that
include a heavy slate of data and events that market
participants expected could prompt some volatile moves.
    Events scheduled on Wednesday include the Treasury
Department’s refunding plans, the conclusion of the Federal
Reserve’s two-day policy meeting, and the likely introduction of
a tax bill.
    The Treasury’s refunding announcement will be watched
because the government is expected to increase the size of its
regular auctions as it faces higher funding needs from a
widening deficit and as the Fed reduces its balance sheet.
    “We expect to see the first increases in coupon auction
sizes since 2009,” said Michael Cloherty, head of U.S. rates
strategy at RBC Capital Markets in New York.
    “There will likely be lot of focus on the supply change,
both because they are very large going forward and because
global central banks are backing away from markets,” Cloherty
    Benchmark 10-year notes             were last unchanged on
the day to yield 2.37 percent.
    Long-dated bond yields fell on Monday after Bloomberg quoted
Treasury Secretary Steven Mnuchin saying that the government
does not see a lot of demand for ultra-long bonds.
    The U.S. central bank is expected to leave interest rates
unchanged when it concludes its two-day policy meeting on
Wednesday, but investors will be watching for any new
indications that a rate hike is likely in December.
    Republicans in the U.S. House of Representatives may also
introduce a long-awaited tax bill on Wednesday, though lawmakers
were still grappling with key provisions on Monday and some
lobbyists expressed concern that legislation might not be ready
as expected.             
    President Donald Trump is expected to announce his choice
for new Fed chair on Thursday, with news reports indicating that
Federal Reserve Governor Jerome Powell is likely to get the
    Economic data is also in focus with manufacturing data on
Wednesday and the jobs report for October on Friday.

 (Reporting by Karen Brettell; Editing by Jonathan Oatis)
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