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TREASURIES-U.S. yields edge up as supply offsets political concerns
May 22, 2017 / 7:41 PM / 7 months ago

TREASURIES-U.S. yields edge up as supply offsets political concerns

    * U.S. Treasury to sell $88 bln in coupon-bearing debt
    * Concerns about stimulus delay support bids for bonds
    * Bankers see $35 bln in high-grade bonds this week - IFR
    * U.S. bond market to close early Friday, shut next Monday

 (Updates market action, adds quote)
    By Richard Leong
    NEW YORK, May 22 (Reuters) - U.S. Treasury yields were
marginally higher on Monday as light selling tied to this week's
government and corporate bond supply overrode safe-haven bids
underpinned by worries about probes into U.S. President Donald
Trump's 2016 campaign.
    The U.S. Treasury Department planned to sell a combined sum
of $88 billion in two-year, five-year and seven-year debt ahead
of the Memorial Day holiday weekend.
    The U.S. bond market is scheduled to close early at 2 p.m.
(1800 GMT) on Friday and will be shut on Monday.
    Corporations were also tapping investors for cash with
bankers expecting $35 billion in investment-grade deals this
week, according to IFR, a Thomson Reuters unit.
    Traders will also watch for clues from Federal Reserve
officials this week on whether the U.S. central bank may raise
interest rates at its June 13-14 policy meeting.
    "It was very quiet today. The market is going to have a hard
time with direction this week," said Mary Ann Hurley, vice
president of fixed income trading at D.A. Davidson in Seattle.
    Over 821,000 10-year Treasury futures contracts changed
hands on Monday, the lowest since April 17, CME Group data
    As some investors reduced their bond holdings to make room
for the new supply, there were signs speculators increased
stakes for bond yields to fall in the wake of reports on a
widening investigation into Trump's presidential campaign and
whether it colluded with Russia last year.
    Last Wednesday, the S&P 500 and the Dow suffered their
steepest one-day drops since September following reports that
Trump tried to interfere with a federal investigation of his
campaign. Investors fled into safe-haven Treasuries, pushing
benchmark yields to one-month lows.
    More reports alleging possible coordination between Trump's
campaign officials and Russia have emerged. 
    "The headlines are not going to go away and ... the
administration's push with its economic agenda seems to be
seriously compromised," said Mike Lorizio, head of Treasuries
trading at Manulife Asset Management in Boston.
    Anxiety about Trump and Republican lawmakers' ability to
deliver on promised tax cuts, looser regulations and
infrastructure spending was limited by higher stock prices. 

    The benchmark 10-year Treasury yield was 2.252
percent, up 0.7 basis point from Friday, while the 30-year yield
 was 2.914 percent, 0.8 basis point higher.
    Last Thursday, the 10-year yield hit a one-month low at
2.180 percent, while the 30-year yield fell to 2.874 percent,
the lowest level since April 21, Reuters data showed.
May 22 Monday 3:10PM New York / 1910 GMT
 US T BONDS JUN7               153-26/32    -0-1/32   
 10YR TNotes JUN7              126-32/256   -0-16/25  
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.8875       0.9017    -0.012
 Six-month bills               1.0275       1.0471    0.023
 Two-year note                 99-242/256   1.2786    0.000
 Three-year note               100-34/256   1.4542    0.002
 Five-year note                100-96/256   1.7952    0.008
 Seven-year note               99-156/256   2.0606    0.008
 10-year note                  101-24/256   2.252     0.007
 30-year bond                  101-188/256  2.9128    0.007
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        24.50         1.00    
 U.S. 3-year dollar swap        20.75         1.00    
 U.S. 5-year dollar swap         7.00        -0.25    
 U.S. 10-year dollar swap       -7.00        -0.50    
 U.S. 30-year dollar swap      -47.25        -0.75    

 (Reporting by Richard Leong; Editing by Paul Simao and Chizu

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