January 13, 2017 / 8:24 PM / 7 months ago

TREASURIES-U.S. yields rise on steady data, stock gains

* Treasury yields rise after in-line retail sales, PPI data
    * U.S. 10-year yield falls for four consecutive weeks
    * Overhang from soft 30-year auction seen feeding into bond
sales
    * U.S. bond market to close on Monday for holiday

 (Updates with late trading)
    By Richard Leong
    NEW YORK, Jan 13 (Reuters) - U.S. Treasury yields rose
Friday as data supporting the notion of a steady U.S. economic
expansion and rising Wall Street stock prices stoked selling in
low-risk government bonds.
    Friday's yield increase pared some of the week's fall tied
to traders scaling back bond bets on potentially higher
inflation and federal borrowing under the incoming Trump 
administration and a Republican-controlled Congress.
    Some investors were disappointed Trump did not disclose
details at his Wednesday news conference on his plans for tax
cuts, looser regulation and more infrastructure spending, which
sparked a massive bond market sell-off around the world
following his presidential win on Nov. 8.
    They now hope for more clues from top Republican lawmakers
on possible measures to boost the economy.
    "There is not a whole lot of conviction in rates until we
hear more from Congress about what they are shooting for in
terms of policies," said Gennadiy Goldberg, interest rates
strategist with TD Securities in New York.  
    Friday's abrupt jump in yields from their initial lows came
soon after U.S. data on retail sales and producer prices in
December, which was largely within analyst forecasts.
  
    Analysts and traders blamed the market turnaround on
computerized sell orders generated in response to buying when
the data was released, pushing bonds to technical levels that
triggered sell orders.
    The rise in yields also stemmed from traders locking in
recent gains ahead of the three-day U.S. Martin Luther King Jr.
weekend and bond dealers reselling their purchases from a soft
$12 billion 30-year Treasury auction on Thursday.  
    "The market is flushing lower because there are a lot of bad
longs out there," said Tom di Galoma, managing director at
Seaport Global Holdings in New York. 
    The benchmark 10-year Treasury yield was up 3 
basis points at 2.391 percent after it fell to 2.307 percent,
its lowest in six weeks.
    The 10-year yield fell for a fourth straight week, a decline
not seen since late May to early July last year, when it fell
for seven consecutive weeks, Reuters data showed.
    University of Michigan data showed the U.S. consumer
inflation outlook improved in early January, underpinning
Friday's rise in yields. 
    Treasury yields retreated as U.S. stock prices pared their
early gains and DBRS downgraded Italy's bond rating, rekindling
some safe-haven bids for bonds. 
    The S&P 500 and Nasdaq moved higher, while
the Dow was slightly lower. 
  January 13 Friday 3:11PM New York / 2011 GMT
                               Price                  
 US T BONDS MAR7               152-2/32     -0-17/32  
 10YR TNotes MAR7              124-180/256  -0-48/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.5225       0.5304    0.012
 Six-month bills               0.5975       0.6076    0.013
 Two-year note                 100-28/256   1.1931    0.012
 Three-year note               99-182/256   1.474     0.019
 Five-year note                100-130/256  1.892     0.024
 Seven-year note               100-88/256   2.1963    0.026
 10-year note                  96-152/256   2.3909    0.030
 30-year bond                  97-200/256   2.9878    0.028
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        29.50         0.50    
 spread                                               
 U.S. 3-year dollar swap        21.50         1.00    
 spread                                               
 U.S. 5-year dollar swap         5.00         0.75    
 spread                                               
 U.S. 10-year dollar swap      -11.75         1.00    
 spread                                               
 U.S. 30-year dollar swap      -47.00         1.25    
 spread                                               
 
    

 (Reporting by Richard Leong; Editing by Andrew Hay and Dan
Grebler)

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