October 9, 2018 / 4:42 PM / 14 days ago

TREASURIES-U.S. long-dated yields slide from multi-year peaks

    * Markets pause sell-off, digests data, auctions this week
    * U.S. ambassador to UN Haley resigning
    * Focus on heavy supply this week

 (Adds comment, U.S. ambassador to UN resigning, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Oct 9 (Reuters) - U.S. long-dated Treasury yields
fell from multi-year highs in choppy trading on Tuesday, as
investors took a breather from selling bonds.
    The bond market was closed on Monday for the Columbus Day
holiday.
    Benchmark U.S. 10-year yields earlier touched a 7-1/2-year
peak, while those on 30-year bonds hit a more than four-year
high. Yields on 7-year notes rose as well, climbing to their
highest in more than eight years.
    Upbeat U.S. economic data as well as hawkish remarks from
Federal Reserve officials that boosted expectations of interest
rate hikes until 2020, had propelled yields to lofty levels. 
    The surge in yields, however, took a step back on Tuesday.
    "After hitting highs overnight in yields, it was basically a
straight drive for buyers across the curve, led by the long
end," said Justin Lederer, a Treasury trader at Cantor
Fitzgerald in New York.
    "It was a pretty big sell-off last week. People are coming
and looking at these yields and finding them attractive,' he
added.
    Federal Reserve Bank of Dallas President Robert Kaplan also
expressed some concern about the jump on U.S. yields, noting
that it suggests "conflicting factors" and along with a proposed
new North America Agreement trade agreement have created
uncertainty among investors over future economic growth
prospects. 
    His remarks weighed slightly on yields. Kaplan, though, is
not a voting member this year.
    U.S. ambassador to the United Nations Nikki Haley's
announcement that she is resigning had little impact on
Treasuries, traders said, but only because market participants
were not quite clear about its implications.
    Haley said on Tuesday that she would stay until the end of
the year and denied she was preparing to challenged President
Donald Trump in the 2020 presidential election.
    "I don't think there's a clear understanding of what it
actually means," Cantor's Lederer said. "But politics will be
front and center over the next month with the midterm
elections."
    In midday trading, U.S. 10-year yields were last at 3.219 
percent, down from 3.227 percent late on Friday.
Earlier in the session, 10-year yields hit 3.261 percent, the
highest since early May 2011.
    U.S. 30-year yields were at 3.386 percent, after
earlier rising to 3.446 percent, its strongest since July 2014.
Last Friday, the 30-year yield was at 3.397 percent.
    U.S. 7-year yields also rose earlier in the session, hitting
3.199 percent, its highest in 8-1/2 years. It was last at 3.163
percent.
    Investors will monitor a slew of global risks, including
this week's slate of heavy supply with $230 billion in bills,
notes, bonds on offer.
    
  October 9 Tuesday 12:14PM New York / 1614 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             2.2          2.2422    0.025
 Six-month bills               2.3625       2.4233    0.007
 Two-year note                 99-190/256   2.8851    -0.004
 Three-year note               99-92/256    2.9794    -0.006
 Five-year note                99-36/256    3.0625    -0.009
 Seven-year note               99           3.1608    -0.010
 10-year note                  97-32/256    3.2177    -0.009
 30-year bond                  92-208/256   3.3843    -0.013
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        18.25         0.75    
 spread                                               
 U.S. 3-year dollar swap        16.75         1.00    
 spread                                               
 U.S. 5-year dollar swap        12.50         1.25    
 spread                                               
 U.S. 10-year dollar swap        4.50         0.75    
 spread                                               
 U.S. 30-year dollar swap      -10.50         0.50    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Bernadette
Baum and Susan Thomas)
  
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