September 6, 2017 / 4:10 PM / in a year

TREASURIES-U.S. T-bill rates fall on plan to raise debt limit

    * Democrats float idea to raise debt ceiling for 3 months
    * Benchmark 10-year yields hold near 10-month low
    * Fed Vice Chair Fischer resigns, to leave in October

 (Updates market action, adds quote)
    By Richard Leong
    NEW YORK, Sept 6 (Reuters) - Interest rates on U.S. Treasury
bills tumbled on Wednesday on investor hopes U.S. lawmakers
would reach a deal to raise the federal borrowing limit before
the government is expected to run out of cash at the end of
    Investors have been concerned that a potential block on the
Treasury's ability to sell more debt could result in a partial
government shutdown, or even a default that could roil financial
    Congressional Democratic leaders said on Wednesday they
would support a plan to tie government aid to help those
affected by Hurricane Harvey to a three-month extension to
suspend the nation's borrowing limit, currently at $19.9
    Although Republican House Speaker Paul Ryan called that idea
"ridiculous" his Senate counterpart, Mitch McConnell, said it is
critical for Congress to pass disaster relief, prevent a default
and keep the government operating.
    Investors had dumped Treasury bills that mature in October
on worries the government would delay repaying them if the debt
ceiling were not increased in time.
    At 12:02 a.m. (1602 GMT), interest rates on T-bills due on
Oct. 5 fell over 17 basis points to 1.075 percent,
its lowest level since Thursday. T-bill rates on other October
issues fell anywhere from 2 basis points to 13 basis points,
Reuters data showed.
    "We might be getting some signs on a debt ceiling deal in
Washington," said Tom Roth, head of U.S. Treasury trading at
MUFG Securities America in New York.
    Longer-dated Treasury yields held steady with benchmark
10-year yield hovering at a near 10-month low,
underpinned by jitters about further nuclear weapon tests by
North Korea and concerns about Hurricane Irma, a powerful storm
heading toward the southern United States.
    The 10-year Treasury yield fell to 2.054 percent
earlier Wednesday, the lowest since Nov. 10. 
    Separately, Federal Reserve Vice Chair Stanley Fischer, said
on Wednesday he will step down from his position on or around
Oct. 13 for personal reasons, ahead of the expiration of his
term as vice chair next year.
  September 6 Wednesday 12:03PM New York / 1603 GMT
 US T BONDS DEC7               157-6/32     0-6/32    
 10YR TNotes DEC7              127-116/256  0-8/256   
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             1.0325       1.0496    0.011
 Six-month bills               1.1325       1.1548    0.013
 Two-year note                 99-234/256   1.294     0.004
 Three-year note               100-80/256   1.391     0.000
 Five-year note                99-228/256   1.6479    0.000
 Seven-year note               99-224/256   1.8942    -0.003
 10-year note                  101-164/256  2.0665    -0.003
 30-year bond                  101-92/256   2.6836    -0.005
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        22.25         0.50    
 U.S. 3-year dollar swap        19.50         0.50    
 U.S. 5-year dollar swap         7.00         0.25    
 U.S. 10-year dollar swap       -4.75         0.50    
 U.S. 30-year dollar swap      -34.50         1.00    

 (Reporting by Richard Leong; Editing by Frances Kerry)
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