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TREASURIES-U.S. yields hit 5-month lows on Trump comments, geopolitical jitters
April 13, 2017 / 2:02 PM / 8 months ago

TREASURIES-U.S. yields hit 5-month lows on Trump comments, geopolitical jitters

    * Trump's low-rate comments send yields to near five-month
    * Geopolitical concerns underpin safe-haven demand for bonds
    * U.S. yield curve moves to flattest level since November
    * Benchmark yield on track steepest weekly drop since July

    By Richard Leong
    NEW YORK, April 13 (Reuters) - U.S. Treasury yields fell on
Thursday, with benchmark yields hitting near five-month lows as
U.S. President Donald Trump's favorable view of low interest
rates intensified this week's bond market rally that was
underpinned by geopolitical worries.
    Trump's rate view appeared in a Wall Street Journal
interview published late Wednesday, in which he also said he
likes and respects Federal Reserve Chair Janet Yellen, whose
term ends in 2018, although he was critical of her during his
presidential campaign.
    "There has been this flight-to-safety for bonds with a lot
of geopolitical risks. Then you have comments from Trump in
favor of low rates and now he might keep Yellen," said Larry
Milstein, head of U.S. government and agency trading at R.W.
Pressprich & Co. in New York.        
    The yield on 10-year Treasury notes was on track
for its biggest weekly decline since July 2016, while the gap
between two-year and 10-year yields contracted to its tightest 
since Nov. 9 after Trump's presidential win.
    Trump's comments on interest rates and Yellen, as well as
his comment that the dollar was too strong, came as his
administration sought to deal with its involvement in the civil
war in Syria and with North Korea's nuclear weapons program.

    Investors have also been worried about the tight French
presidential election on April 23. Opinion polls raised concerns
that hard-left candidate Jean-Luc Melenchon and far-right leader
Marine Le Pen, who are both anti-EU, could end up in a runoff
next month.
    Benchmark 10-year Treasury yields were down over
3 basis points at 2.261 percent after hitting 2.218 percent
earlier Thursday, which was the lowest since Nov. 17.
    The 30-year bond yield was down over 2 basis
points at 2.907 percent after falling to 2.870 percent, a level
last traded on Nov. 10.        
    The U.S. bond market will shut early at 2 p.m. EDT (1800
GMT) ahead of the market holiday on Good Friday.
  April 13 Thursday 9:45AM New York / 1345 GMT
 US T BONDS JUN7               153-17/32    0-17/32   
 10YR TNotes JUN7              125-220/256  0-100/25  
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.8          0.8127    -0.002
 Six-month bills               0.9125       0.9294    -0.013
 Two-year note                 100-16/256   1.2174    -0.021
 Three-year note               100-54/256   1.4278    -0.035
 Five-year note                100-104/256  1.7888    -0.041
 Seven-year note               100-92/256   2.0692    -0.044
 10-year note                  99-228/256   2.2623    -0.034
 30-year bond                  101-216/256  2.907     -0.023
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        32.50         0.50    
 U.S. 3-year dollar swap        25.75         0.75    
 U.S. 5-year dollar swap        10.75         0.25    
 U.S. 10-year dollar swap       -3.50         0.25    
 U.S. 30-year dollar swap      -40.50         0.00    

 (Reporting by Richard Leong; Editing by Chizu Nomiyama)

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