* Comey firing raises worries about Trump's economic agenda
* Treasuries bids diminish after poor 10-year note sale
* U.S. 10-year yield retests 5-week high
* Fed's Rosengren sees possibly three more rate hikes in
(Updates market action, adds quote)
By Richard Leong
NEW YORK, May 10 U.S. Treasury yields were
little changed on Wednesday as a weak 10-year note auction
offset concerns about a political storm over U.S. President
Donald Trump's ouster of the FBI chief that could hinder his
plans for tax cuts and infrastructure spending.
U.S. bond yields fell overnight in reaction to Trump's
abrupt dismissal of FBI Director James Comey late Tuesday. It
drew a storm of criticism, mostly from Democrats, that the move
was aimed at blunting the agency's probe into the Trump
presidential campaign's possible collusion with Russia to sway
last year's election.
The yield drop faded following below-average investor demand
at a $23 billion 10-year note sale with benchmark yields
retesting a five-week high reached on Tuesday.
"It's all taken in stride at this point," Bill Northey,
chief investment officer at the private client group of U.S.
Bank in Helena, Montana, said of Comey's firing. "This is about
the Fed and inflation levels."
Boston Fed President Eric Rosengren said on Wednesday the
central bank should raise rates three more times in 2017 and
start reducing its $4.5 trillion balance sheet.
Interest rate futures implied traders saw an 83 percent
chance the Fed would raise its benchmark overnight rate by a
quarter of a percentage point to a range of 1.00 percent to 1.25
percent at its June 13-14 policy meeting, compared
with 88 percent on Tuesday, according to CME Group's FedWatch
Earlier Wednesday, the Labor Department said U.S. import
prices grew 0.5 percent in April, which was above forecast and
marked a fifth straight month of increases.
Competition from a growing pipeline of higher-yielding
corporate bonds also put upward pressure on Treasury yields.
Companies have raised more than $23 billion with
investment-grade bonds so far this week, according to IFR, a
Thomson Reuters unit.
The benchmark 10-year Treasury yield touched
2.416 percent, a five-week high already struck on Tuesday. It
was last at 2.412 percent, up half a basis point on the day.
The 30-year bond yield was flat at 3.040
percent, holding below 3.047 percent set on Tuesday, which was
its highest level since March 31.
The Treasury Department will complete May's $62 billion
refunding with a $15 billion sale of 30-year bonds
on Thursday following a cool reception to the
three-year and 10-year auctions.
"The 30-year is a different kind of animal. There should be
good demand but some people may stay cautious because of its
duration," said Justin Lederer, Treasury strategist at Cantor
Fitzgerald in New York.
May 10 Wednesday 2:12PM New York / 1812 GMT
US T BONDS JUN7 150-20/32 -0-4/32
10YR TNotes JUN7 124-212/256 0
Price Current Net
Yield % Change
Three-month bills 0.885 0.8993 -0.016
Six-month bills 1.0175 1.037 0.003
Two-year note 99-204/256 1.3548 0.000
Three-year note 99-206/256 1.5669 -0.003
Five-year note 99-184/256 1.9346 0.000
Seven-year note 98-152/256 2.2188 0.000
10-year note 98-160/256 2.4087 0.002
30-year bond 99-80/256 3.0351 -0.004
DOLLAR SWAP SPREADS
Last (bps) Net
U.S. 2-year dollar swap 25.00 -2.00
U.S. 3-year dollar swap 20.25 -3.50
U.S. 5-year dollar swap 6.25 -1.75
U.S. 10-year dollar swap -8.75 -1.50
U.S. 30-year dollar swap -46.50 -1.25
(Reporting by Richard Leong; Editing by Nick Zieminski and