* U.S. to sell $56 billion in coupon-bearing debt
* Futures imply traders see Fed hiking rates next week
* Spec net shorts in 10-year T-notes hit record high -CFTC
By Richard Leong
NEW YORK, March 6 U.S. Treasury yields were
little changed on Monday with two-year yields holding below a
7-1/2 year peak, as investors made room for this week's hefty
sale of government and corporate bonds.
Investors were also digesting a sharp spike in yields
spurred by a barrage of remarks from Federal Reserve officials
including Fed Chair Janet Yellen, which led traders to perceive
that the central bank will increase interest rates by a quarter
of a percentage point at its policy meeting next week.
"The data kept coming in positive and they fanned up the
rate expectations of some members," Blake Gwinn, U.S. rates
strategist at NatWest Markets in Stamford, Connecticut.
The latest upbeat news was a second month of an increase in
domestic factory orders in January.
There is a chance the Fed might back away from a rate hike
if the February jobs report due on Friday comes in much weaker
than forecast, but for now, traders see a rate increase is
almost a done deal.
Interest rates futures implied traders placed nearly an 89
percent chance the Fed will raise interest rates at its upcoming
meeting, up from 80 percent at Friday's close, CME
Group's FedWatch tool showed.
Speculators also ratcheted up their bets on rising bond
yields with data showing their net bearish bets on 10-year
Treasury note futures reaching a record high last week,
according to data from the Commodity Futures Trading Commission.
The benchmark 10-year Treasury yield was little
changed at 2.498 percent, while the 30-year bond yield
rose 2 basis points to 3.101 percent.
The two-year yield, which is most sensitive to
traders' view on Fed policy, edged up marginally to 1.313
percent. It hit 1.345 percent on Friday which was its highest
intraday level since August 2009.
A drop in stock prices in the aftermath of North Korea
firing four ballistic missiles and U.S. President Donald Trump's
accusation that his predecessor Barack Obama wiretapped him
stoked some safety bids for Treasuries.
In the meantime, investors will focus on this week's bond
The Treasury Department will sell $24 billion in three-year
notes on Tuesday; $20 billion in 10-year debt on Wednesday and
$12 billion in 30-year bonds on Thursday.
Companies were expected to sell $35 billion of
investment-grade bonds in the U.S. corporate bond market this
week, according to IFR, a Thomson Reuters unit.
March 6 Monday 11:02AM New York / 1602 GMT
US T BONDS JUN7 148-31/32 -0-9/32
10YR TNotes JUN7 123-148/256 0
Price Current Net
Yield % Change
Three-month bills 0.72 0.7313 0.025
Six-month bills 0.83 0.845 0.013
Two-year note 99-162/256 1.3134 0.008
Three-year note 99-100/256 1.5875 0.002
Five-year note 99-80/256 2.0207 0.004
Seven-year note 98-192/256 2.3199 0.003
10-year note 97-212/256 2.4979 0.006
30-year bond 98-8/256 3.1013 0.018
DOLLAR SWAP SPREADS
Last (bps) Net
U.S. 2-year dollar swap 32.75 -1.50
U.S. 3-year dollar swap 26.75 -1.00
U.S. 5-year dollar swap 10.00 -1.25
U.S. 10-year dollar swap -4.25 -1.50
U.S. 30-year dollar swap -40.25 -1.50
(Reporting by Richard Leong Editing by W Simon)