September 26, 2019 / 7:07 PM / 19 days ago

TREASURIES-U.S. yields tumble after whistleblower complaint on Trump

    * Long-dated yields fall to day's lows after whistleblower
report
    * Whistleblower says Trump sought Ukraine's help in 2020
election 
    * U.S. data impact overshadowed by complaint
    * U.S. Treasury's 7-year auction shows solid demand

 (Adds new comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 26 (Reuters) - U.S. Treasury yields dropped
on Thursday as political risks escalated after a congressional
panel released a whistleblower complaint that accused President
Donald Trump of pressing a foreign government to investigate a
potential rival at next year's presidential election.
    Yields on long-dated U.S. debt fell to session lows
following the release of the complaint. Overall, 10-year and
30-year yields declined in eight of the last nine sessions.
    The complaint showed Trump pressed Ukrainian President
Volodymyr Zelenskiy to investigate former Vice President Joe
Biden to advance Trump's personal interest, according to the
House Intelligence Committee.
    Saying that more than six White House officials had made
contact about Trump's communication with Ukraine, the report
cited concerns that efforts to put pressure on Ukraine "pose
risks to U.S. national security," undermining efforts "to deter
and counter foreign interference in U.S. elections."

    Earlier this week, U.S. House of Representatives Speaker
Nancy Pelosi said the Democratic-led House was moving forward
with an official impeachment inquiry against Trump, saying no
one was above the law. The Ukraine issue is at the heart of the
impeachment probe.
    "We had anticipated this (impeachment talk) a year ago when
we had the mid-term elections and the House was led by
Democrats," said John Herrmann, rates strategist, at MUFG
Securities Americas in New York.
    "We knew that impeachment is the ultimate goal of the
House's committee heads and so now we're moving along that path.
    We thought that would be, on the margin, disruptive to the
economy and disruptive to risk-taking," he added.
    According to a summary of a telephone call released by the
Trump administration on Wednesday, Trump pressed Ukraine's
leader to investigate Democratic presidential front-runner Joe
Biden, in coordination with the U.S. attorney general and
Trump's personal lawyer.
    In afternoon trading, U.S. 10-year note yields
fell to 1.688% from 1.732% late on Wednesday.
    Yields on 30-year bonds were also lower at
2.134%, from 2.1835 on Wednesday. 
    U.S. two-year yields were down at 1.653%, from
Wednesday's 1.683%.
    The whistleblower complaint overshadowed U.S. economic
reports that were largely in line with expectations, although
some of the details were on the weak side.
    Gross domestic product increased at an unrevised 2.0% rate
in the second quarter, expanding 2.6% in the first half. U.S.
business investment though contracted more sharply than
previously estimated in the second quarter while corporate
profit growth was tepid.
    Also on Thursday, the Treasury's seven-year note auction was
solid overall, with a high yield lower than the expected yield
at the bid deadline, suggesting healthy demand. 
    There were nearly $79.8 billion in bids for a 2.49
bid-to-cover ratio, much higher than the 2.16 cover last month,
which was the lowest since March 2009, but only slightly better
than the 2.43 average.
    
      September 26 Thursday 1:22PM New York / 1722 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.8          1.8383    -0.057
 Six-month bills               1.8275       1.8752    -0.031
 Two-year note                 99-184/256   1.6435    -0.039
 Three-year note               99-198/256   1.5784    -0.041
 Five-year note                99-174/256   1.5669    -0.047
 Seven-year note               98-94/256    1.6252    -0.042
 10-year note                  99-120/256   1.6835    -0.048
 30-year bond                  102-168/256  2.1293    -0.054
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        -1.00         0.75    
 spread                                               
 U.S. 3-year dollar swap        -3.25         0.75    
 spread                                               
 U.S. 5-year dollar swap        -7.25         0.00    
 spread                                               
 U.S. 10-year dollar swap      -12.75         0.50    
 spread                                               
 U.S. 30-year dollar swap      -43.00         1.00    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss
Editing by Peter Graff and Nick Zieminski)
  
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