December 18, 2019 / 2:43 PM / a month ago

TREASURIES-U.S. yields steady as investors shrug off likely impeachment

    By Ross Kerber
    BOSTON, Dec 18 (Reuters) - U.S. Treasury yields were steady
on Wednesday as investors shrugged off the likely impeachment of
U.S. President Donald Trump.
    The benchmark 10-year yield was up less than a
basis point at 1.8959% in trading on Wednesday morning.
    The U.S. House of Representatives is set to take a momentous
and deeply polarizing vote on Wednesday when it is likely to
impeach President Donald Trump on charges of abusing his office
and obstructing a congressional probe.
    In theory, the step could shake confidence in Treasuries,
but the political action appears already priced into yields,
said Priya Misra, head of global rates strategy for TD
Securities. Because Trump is "unlikely to get convicted (by the
U.S. Senate) it doesn't matter for policy, and that's why its
largely unchanged," she said. 
    In addition, Misra said, Congress and the White House have
proven able to make at least some progress on areas like
reaching a budget deal and trade agreements with China and
Mexico, steadying investor confidence.
    In that sense the impeachment could be functioning to
release the pressure on other aspects of government's functions
in a divided country, she said.
    "Perhaps impeachment has made it more likely that policy is
not at gridlock," she said.
    Earlier on Wednesday, Euro zone bond yields steadied in
quiet trading after falling on renewed anxiety about Brexit
after Britain set a hard deadline of December 2020 to reach a
trade deal with the European Union, creating a new
cliff-edge.
    German business morale rose more than expected in December
to hit a six-month high in a survey released on Wednesday,
suggesting that Europe's largest economy picked up steam in the
fourth quarter despite a persistent manufacturing crisis.
 
    The two-year yield, which typically moves in step
with interest rate expectations, was up less than a basis point
at 1.6369% in morning trading.
    
      December 18 Wednesday 9:28AM New York / 1428 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.5275       1.559     -0.013
 Six-month bills               1.5375       1.5754    -0.003
 Two-year note                 99-189/256   1.6369    0.004
 Three-year note               99-224/256   1.668     0.011
 Five-year note                98-244/256   1.7216    0.011
 Seven-year note               98-168/256   1.8318    0.009
 10-year note                  98-176/256   1.8959    0.007
 30-year bond                  101-40/256   2.3211    0.005
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         6.25         0.75    
 spread                                               
 U.S. 3-year dollar swap         1.75         0.00    
 spread                                               
 U.S. 5-year dollar swap        -1.25        -0.25    
 spread                                               
 U.S. 10-year dollar swap       -5.25         0.00    
 spread                                               
 U.S. 30-year dollar swap      -29.75         0.25    
 spread                                               
 
 (Editing by Nick Zieminski)
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