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TREASURIES-U.S. bond yields rise with oil before auctions
December 12, 2016 / 1:39 PM / 9 months ago

TREASURIES-U.S. bond yields rise with oil before auctions

* Benchmark yields hit highest level since Sept 2014
    * Oil futures reach 18-month peak on deal to cut output
    * U.S. to sell $24 bln 3-year notes, $20 bln 10-year notes

 (Updates market action, adds details)
    NEW YORK, Dec 12 (Reuters) - U.S. Treasury yields rose on
Monday, with benchmark yields hitting their highest since
September 2014 as a jump in oil prices stoked inflation bets
ahead of auctions of three-year and 10-year U.S. government
debt. 
    Oil futures gained as much as 6.5 percent to an
18-month high after the Organization of the Petroleum Exporting
Countries and other major producers reached their first
agreement since 2001 to pare output in a bid to deal with global
oversupply and to boost prices. 
    A rebound in crude prices reinforced the notion that U.S.
inflation is the rise with expectations of fiscal stimulus from
the Trump administration.
    Bets on a surge in government borrowing as a result of
possible sharp tax cuts and heavy federal spending have been
behind the Treasuries selloff since the Nov. 8 U.S. election.
    The U.S. Treasury Department will sell $24 billion
three-year notes at 11:30 a.m. (1630 GMT) and $20
billion in 10-year notes at 1 p.m. (1800 GMT).
    The Treasuries supply comes before a widely expected
quarter-point interest rate increase from the Federal Reserve,
which will hold a two-day policy meeting on Tuesday and
Wednesday. 
    The yield on 10-year Treasury notes was last up
more than 4 basis points at 2.510 percent. Earlier Monday, it
struck 2.528 percent, which was the highest since Sept. 29,
2014, according to Reuters data.
  Monday, Dec. 12, 8:20AM New York / 1320 GMT
                               Price                  
 US T BONDS MAR7               147-29/32    -0-19/32  
 10YR TNotes MAR7              123-192/256  -0-72/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.53         0.538     -0.003
 Six-month bills               0.6275       0.6382    0.002
 Two-year note                 99-182/256   1.1492    0.016
 Three-year note               98-194/256   1.4354    0.019
 Five-year note                99-64/256    1.909     0.027
 Seven-year note               98-252/256   2.2835    0.036
 10-year note                  95-152/256   2.5042    0.040
 30-year bond                  93-252/256   3.1884    0.033
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        22.25        -1.25    
 spread                                               
 U.S. 3-year dollar swap        15.75        -0.50    
 spread                                               
 U.S. 5-year dollar swap         0.75        -0.25    
 spread                                               
 U.S. 10-year dollar swap      -13.75        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -50.75         0.50    
 spread                                               
 
    

 (Reporting by Richard Leong; Editing by Chizu Nomiyama and Lisa
Von Ahn)

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