July 12, 2018 / 3:02 PM / 4 months ago

TREASURIES-U.S. yields higher as equities rise, trade fears ebb

    * Core CPI was within expectations in June
    * U.S. to sell $14 bln 30-year bonds at 1:00 p.m. (1700 GMT)

    By James Thorne
    NEW YORK, July 12 (Reuters) - U.S. Treasury yields edged
higher on Thursday as investors turned from trade fears to stock
market optimism and data showed U.S. inflation buildup remained
modest.
    The consumer price index (CPI) rose 0.1 percent in June,
slightly less than analysts had expected. The CPI core rate,
which better reflects the underlying inflation trend, came in at
0.2 percent month-over-month and 2.3 percent year-over-year, in
line with expectations of economists polled by Reuters.

    The CPI readings supported the view that inflation is near
the Federal Reserve's 2 percent goal.
    "It all fits within the within the context of firming
inflationary trends with an extended economic expansion. And
it's really fitting within that thesis of why the Fed has
continued to raise short-term rates and is likely to continue to
do so throughout this year," said Bill Northey, senior vice
president at U.S. Bank Wealth Management in Helena, Montana.
    Domestic weekly jobless claims also fell to a two-month low
as the labor market tightened further. 
    Bond yields also rose as demand for equities rebounded from
the previous day's drop, with investors hoping for strong U.S.
corporate earnings and as major deals offset China-U.S. trade
war worries.
    On the supply front, analysts expected strong demand for the
auction for $14 billion in 30-year bonds at 1 p.m. (1700 GMT) on
Thursday, after a successful auction for 10-year notes on
Wednesday.
    The Treasury is set to sell $69 billion coupon-bearing debt
this week.
    Benchmark 10-year Treasuries yielded 2.849
percent at 10:46 a.m. (1446 GMT).
    U.S. 2-year notes reached 2.602 percent, matching
a level seen a month ago that was the highest since August 2008.
    The yield curve was little moved from late Wednesday, with
the spread between 2-year and 10-year Treasuries at 26.10 basis
points.  
    
July 12 Thursday 10:46AM New York / 1446 GMT
                               Price                  
 US T BONDS SEP8               145-11/32    -4/32     
 10YR TNotes SEP8              120-52/256   -2/32     
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.915        1.9509    -0.010
 Six-month bills               2.0975       2.1493    0.007
 Two-year note                 99-214/256   2.5859    0.008
 Three-year note               99-218/256   2.6768    0.008
 Five-year note                99-112/256   2.7468    0.007
 Seven-year note               99-148/256   2.817     0.005
 10-year note                  100-56/256   2.8491    0.005
 30-year bond                  103-116/256  2.95      0.006
         YIELD CURVE           Last (bps)   Net       
                                            Change    
                                            (bps)     
 10-year vs 2-year yield       26.10        -0.60     
 30-year vs 5-year yield       20.20        0.20      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        23.50         0.00    
 spread                                               
 U.S. 3-year dollar swap        19.75         0.25    
 spread                                               
 U.S. 5-year dollar swap        13.75        -0.25    
 spread                                               
 U.S. 10-year dollar swap        6.75        -0.25    
 spread                                               
 U.S. 30-year dollar swap       -3.50         0.00    
 spread                                               
 
    
 (Reporting by James Thorne)
  
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