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TREASURIES-Yields fall on doubts about economic impact of Trump policies
February 23, 2017 / 8:53 PM / 7 months ago

TREASURIES-Yields fall on doubts about economic impact of Trump policies

    * Mnuchin wants tax plan passed by August
    * Investors doubt Mnuchin's time table
    * U.S. 7-year note auction shows mixed results

 (Adds comment, results of U.S. 7-year note auction)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Feb 23 (Reuters) - U.S. Treasury debt yields fell
on Thursday as investors fretted about the lack of clarity in
the Trump administration's policies and doubted whether its
proposed reforms would have as big an impact as many initially
thought they would.
    "There are more questions being raised in general across all
markets about how deeply or quickly the new administration would
have an impact on the economy," said Dominic Pappalardo,
director of taxable portfolio management at McDonnell Investment
Management in Oakbrook Terrace, Illinois. 
    Benchmark U.S. 10-year yields hit two-week lows, while those
of 30-year bonds slid for a fifth straight session. U.S.
two-year yields traded lower for a second straight day.
    U.S. Treasury Secretary Steven Mnuchin spoke on Thursday,
saying he wants to see a major tax plan passed before Congress
by August, but he failed to give details about it.             
    Investors were also skeptical about that timetable.
    "I don't think anybody who seriously thinks about the
mechanics of passing laws in this country would think a major
sweeping tax reform introduced in March could be signed, sealed,
and delivered by August," said Tom Simons, money market
economist at Jefferies in New York. 
    In afternoon trading, U.S. 10-year notes             were
last up 10/32 in price, yielding 2.382 percent, compared with
2.418 percent late Wednesday. Yields fell as low as 2.379
percent, their weakest level since Feb. 9.
    U.S. 30-year bond             prices rose 10/32, yielding
3.021 percent, down from Wednesday's 3.036 percent. 
    U.S. two-year note prices were up 2/32, yielding 1.192
percent           , down from Wednesday's 1.224 percent.
    Pappalardo said he was not too worried about the decline in
rates over the past week.
    "People still expect rates to go higher. But I think the
pace of those expectations may have slowed down a little bit,"
he said.    
    Atlanta Federal Reserve Bank President Dennis Lockhart on
Thursday joined a chorus of Fed officials who believe the Fed
could raise rates next month.             His comments had
little impact though as he is expected to retire next week.
    A generally decent U.S. 7-year note auction totaling $28
billion added to the market's bid tone. The note had a high
yield of 2.197 percent, slightly higher than the expected rate
of 2.196 percent at the bid deadline.
    Bids totaled $69.7 billion for a 2.49 cover, better than
last month's 2.45, but below the 2.51 average. Indirect bidders,
consisting of central banks, accepted 63.8 percent, lower than
January's record 72.8 percent, but higher than the 64.3 percent
average.             

 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Meredith
Mazzilli and Andrew Hay)
  
 

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