August 23, 2017 / 6:57 PM / a year ago

TREASURIES-Yields fall as Trump signals possible government shutdown

 (Adds comments, quote; updates prices)
    * Trump comments on government shutdown prompt safety buying
    * Yields on T-bills due in early October rise
    * Central bankers' Jackson Hole meeting in focus

    By Karen Brettell
    NEW YORK, Aug 23 (Reuters) - U.S. Treasury yields fell on
safety buying on Wednesday after President Donald Trump said
that he would be willing to risk a government shutdown to secure
funding for a border wall, raising fears that a battle to raise
the debt ceiling could delay payments on some bonds.
    Congress will have about 12 working days when it returns on
Sept. 5 from its summer break to approve spending measures to
keep the government from shutting down, and a deadline also is
closing in for raising the cap on the amount the federal
government may borrow.             
    "The Trump remarks day by day are adding to a sense of
uncertainty," said Gennadiy Goldberg, an interest rate
strategist at TD Securities in New York. "There's a sense in the
market that things might get worse on the government front
better they get better."
    Trump made the comments at a rally late on Tuesday.
    U.S. House Speaker Paul Ryan said on Wednesday that a
shutdown is unnecessary and not wanted by lawmakers in Congress.
    Fitch Ratings said on Wednesday that a failure by U.S.
officials to raise the federal debt ceiling in a timely manner
would prompt it to review the U.S. sovereign rating, "with
potentially negative implications."             
    Benchmark 10-year notes             gained 12/32 in price to
yield 2.17 percent, down from 2.22 percent on Tuesday.
    Yields on Treasury bills that are due near when the
government is expected to run out of money also jumped. Yields
on bills due Oct. 5              rose to 1.155 percent, the
highest level since Aug. 10.
    Benchmark yields have held in a tight range since falling to
almost two-month lows on Friday on concerns about political
discord in Washington and tensions between the United States and
North Korea.
    North Korean leader Kim Jong Un has ordered more solid-fuel
rocket engines, state media reported on Wednesday.             
    Investors are next focused on a central banking conference
in Jackson Hole, Wyoming, which begins on Thursday, where
Federal Reserve Chair Janet Yellen and European Central Bank
President Mario Draghi are both due to speak.
    Market participants will be watching for any signals that
the ECB is close to paring its bond purchases, though two
sources have told Reuters that Draghi will not deliver any new
policy message at the event.             
    The Fed is widely expected to announce a plan to reduce its
balance sheet at its September meeting.

 (Additional reporting by Sam Forgione; Editing by Lisa
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