February 23, 2017 / 3:53 PM / 9 months ago

TREASURIES-Yields slide as U.S. tax plan still lacks clarity

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Feb 23 (Reuters) - Yields on U.S. Treasuries fell
on Thursday after U.S. Treasury Secretary Steven Mnuchin said he
wants to see a major tax plan passed before Congress by August,
but failed to give details about it. 
    Benchmark U.S. 10-year yields hit two-week lows, while those
of 30-year bonds slid for a fifth straight session. U.S.
two-year yields traded lower for a second straight day.
    Mnuchin said he wants to see "very significant" tax reform
passed before Congress' August recess and that the Trump
administration was looking closely at border tax issues.
    "People are thirsty for details on what the tax plan is
going to be," said Tom Simons, money market economist at
Jefferies in New York. "The release of details on this tax plan 
keeps getting pushed back."
    Ordinarily news about a tax plan overhaul would trigger a
selloff in bonds, as it did in the past, but investors have
grown skeptical, analysts said.
    "I don't think anybody who seriously thinks about the
mechanics of passing laws in this country would think that a
major sweeping tax reform introduced in March could be signed,
sealed and delivered by August," said Simons. 
    "That's a very aggressive time table for Congress to operate
on," he added.
    In morning trade, U.S. 10-year notes             were last
up 8/32 in price to yield 2.389 percent, compared with 2.418
percent late on Wednesday. Yields fell as low as 2.384 percent,
their lowest level since Feb. 9.
    U.S. 30-year bond             prices rose 8/32, yielding
3.023 percent, down from Wednesday's 3.036 percent. 
    U.S. two-year note prices were up 2/32, yielding 1.192
percent           , down from 1.224 percent.
    Atlanta Federal Reserve Bank President Dennis Lockhart on
Thursday joined a chorus of Fed officials who believe the U.S.
central bank could raise interest rates next month.            
His comments had little impact though, analysts said, because he
will retire next week.
    Investors were also focused on the U.S. Treasury's $28
billion in 7-year notes auction later in the session.
    "The strength of the bullish tone in Treasury markets is
something we've often noted in this space and is a factor that
will likely help the note at the event," said BMO Capital
Markets in a research note.

 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Meredith

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