November 7, 2016 / 3:58 PM / a year ago

TREASURIES-Yields climb after FBI says won't prosecute Clinton over emails

By Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 7 (Reuters) - U.S. Treasury yields rose on
Monday, as risk appetite improved after the U.S. Federal Bureau
of Investigation cleared Democratic presidential nominee Hillary
Clinton of any wrongdoing in the use of a private email server.
    U.S. long-dated yields, which move inversely to prices,
trended lower over the past week after the FBI said it was
looking at another large batch of Clinton's emails, narrowing
her lead in the polls over Republican presidential contender
Donald Trump.
    But the FBI late on Sunday said it stood by its earlier
finding that no criminal charges were warranted against Clinton
for using a private email server for government work, prompting
a sell-off in Treasuries ahead of the U.S. election.
    The U.S. presidential election will be held on Tuesday.
    "The news yesterday that the FBI has cleared Secretary
Clinton basically gave a risk tone to the market and this is
pushing risk assets sharply higher," said Gennadiy Goldberg,
interest rates strategist, at TD Securities in New York.
    "This does give the market a bit of a respite to the
risk-off tone that we have been basically seeing the last week,"
he added.
    Clinton is associated with higher risk appetite because she
is a "known quantity," Goldberg said. 
    On the other hand, Trump is more of a wild card whose
policies could veer away from that of the current
administration. If elected, analysts said Trump could inject
uncertainty in the market and drive a rally in Treasuries.
    In mid-morning trading, benchmark 10-year note yields were
down 10/32 in price to yield 1.820 percent, up from
Friday's 1.783 percent. 
    U.S. 30-year bond prices fell 15/32, yielding 2.595 percent,
up from 2.57 percent last Friday.
    Two-year note yields, which are most sensitive to
interest rate changes, were at 0.821 percent, up from Friday's
0.793 percent. 
    Supply is also a focus this week aside from the U.S.
    The Treasury Department is selling $62 billion in notes and
bonds, with $24 billion in three-year notes on Tuesday, $23
billion in 10-year notes on Wednesday, and $15 billion in
30-year bonds on Thursday. Also on tap are $78 billion in 3- and
6-month bills on Monday, with $20 billion in 52-week bills and
$55 billion n 4-week bills on Tuesday.
    TD's Goldberg said there should be solid demand at these
auctions given the higher yield. 

 (Editing by Bernadette Baum)

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