April 6, 2017 / 7:32 PM / 4 months ago

TREASURIES-Yields inch lower as politics, U.S. jobs data eyed

5 Min Read

    * U.S. 2-7 year yields 2-3 bps above multi-week lows
    * Traders await Trump-Xi meeting, U.S. non-farm payrolls
data
    * Paul Ryan tax reform comments keep yields from rising

 (Updates prices, adds analyst comment)
    By Sam Forgione
    NEW YORK, April 6 (Reuters) - U.S. Treasury yields edged
lower on Thursday amid uncertainty ahead of a key U.S. jobs
report Friday and a meeting between U.S. President Donald Trump
and Chinese President Xi Jinping, and also over the fate of
Trump's pro-growth agenda.
    Yields on Treasuries maturing between two and seven years
hovered two to three basis points above multi-week lows touched
earlier in the week before these events. The meeting between
Trump and Xi Thursday will be their first. On jobs, economists
polled by Reuters expect U.S. employers to have added 180,000
jobs last month.
    "People are very careful about positioning ahead of
payrolls," said Subadra Rajappa, head of U.S. rates strategy at
SG Corporate & Investment Banking in New York. She said yields
could fall on a weak report, while stronger average hourly
earnings could push yields higher by lifting expectations for a
June interest rate increase from the Federal Reserve.
    Analysts said comments on Wednesday by U.S. House of
Representatives Speaker Paul Ryan stoked concerns over the
feasibility of Trump's agenda, in turn driving a bid for
safe-haven U.S. government debt that prevented yields from
rising. 
    Ryan said tax reform would take longer to accomplish than
repealing and replacing the Affordable Care Act, known as
Obamacare, and that Congress and the White House were initially
closer to agreement on healthcare legislation than on tax
policy.
    "Ryan saying tax reform was going to potentially take
longer, that is pretty much just opening up the possibility that
the first 100 days of Trump's presidency is not going to see any
material actionable planning being done," said Stanley Sun,
interest rate strategist at Nomura Securities International in
New York.
    Traders also digested minutes from the Fed's March meeting
released Wednesday afternoon, which showed most Fed policymakers
think the U.S. central bank should take steps to begin trimming
its $4.5 trillion balance sheet this year as long as economic
data holds up.
    Benchmark 10-year Treasury notes were last up
4/32 in price to yield 2.343 percent, from a yield of 2.357
percent late Wednesday. U.S. 30-year Treasury bonds
were last up 9/32 in price to yield 2.990 percent, from a yield
of 3.005 percent late Wednesday. 
    U.S. three-year yields were last roughly flat at
1.448 percent after touching a more than five-week low of 1.426
percent Wednesday. 
    
    April 6 Thursday 3:14PM New York / 1914 GMT
                               Price                  
 US T BONDS JUN7               151-22/32    0-6/32    
 10YR TNotes JUN7              125-28/256   0-16/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.7975       0.8102    0.007
 Six-month bills               0.9175       0.9346    0.006
 Two-year note                 100-2/256    1.246     -0.004
 Three-year note               100-128/256  1.4504    -0.003
 Five-year note                100-12/256   1.8651    -0.003
 Seven-year note               99-212/256   2.1516    -0.007
 10-year note                  99-44/256    2.3444    -0.013
 30-year bond                  100-48/256   2.9903    -0.015
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        33.75         0.75    
 spread                                               
 U.S. 3-year dollar swap        29.50         0.50    
 spread                                               
 U.S. 5-year dollar swap        11.50         0.25    
 spread                                               
 U.S. 10-year dollar swap       -2.25         0.00    
 spread                                               
 U.S. 30-year dollar swap      -39.50        -0.25    
 spread                                               
 
 (Editing by Bernadette Baum and James Dalgleish)
  

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