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TREASURIES-U.S. yields advance after FBI clears Clinton in email probe
November 7, 2016 / 8:52 PM / a year ago

TREASURIES-U.S. yields advance after FBI clears Clinton in email probe

* Clinton seen as 'known' candidate, win means status quo
for markets
    * U.S. bill auctions receive solid foreign central bank
demand

 (Adds comment, auction results; updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 7 (Reuters) - U.S. Treasury yields rose on
Monday, as risk appetite improved after the Federal Bureau of
Investigation cleared Democratic presidential candidate 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 selloff in Treasuries ahead of the U.S. election. 
    The U.S. presidential election will be held on Tuesday.
    "We have this big jump in risk appetite after the FBI
basically cleared Clinton from indictment with regard to the
email scandal," said Kim Rupert, managing director of global
fixed income at Action Economics in San Francisco. 
    "It's a fairly obvious trade. It is interesting to see
though how it proceeds in the future, what the election says in
terms of Congress."
    Clinton is associated with higher risk appetite because she
is a "known quantity," said Gennadiy Goldberg, interest rates
strategist, at TD Securities in New York.
    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 into the market and drive a rally in Treasuries.
    In late trading, benchmark U.S. 10-year Treasury note yields
were down 11/32 in price to yield 1.824 percent, up
from Friday's 1.783 percent. 
    U.S. 30-year bond prices fell 17/32, yielding 2.598 percent,
up from 2.57 percent last Friday.
    Two-year note yields, which are most sensitive to
interest rate changes, were at 0.817 percent, up from Friday's
0.793 percent. 
    Supply is also a focus this week aside from the U.S.
election. 
    Treasury's $78 billion bill auction was lackluster, but had
decent indirect demand. The 3-month issue had a high yield of
0.420 percent versus 0.405 percent at the bid deadline. Indirect
bids totaled 33 percent, double last week's 15.2 percent,
according to Action Economics. 
    The $36 billion 6-month bill's high yield, meanwhile, was
O.535 percent, unchanged from the bid deadline. There were
$122.3 billion in bids for a 3.41 cover, a little below last
week's 3.48, said Action Economics. Indirect bidders accepted
50.9 percent, up from 43.4 percent previously. 
    On tap for Tuesday, meanwhile, is the $24 billion U.S.
three-year note auction.

 (Editing by Bernadette Baum and Meredith Mazzilli)

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