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TREASURIES-Treasuries steady, Fed's Bostic slightly dovish
January 8, 2018 / 8:36 PM / 8 days ago

TREASURIES-Treasuries steady, Fed's Bostic slightly dovish

 (Updates market action after Fed speeches)
    * Treasury to sell $56 bln supply this week
    * Stronger German debt helps U.S. bonds firm
    * Fed's Bostic indicates doubt about three rate hikes this
year

    By Kate Duguid
    NEW YORK, Jan 8 - U.S. bond yields were little changed on
Monday after a boost from stronger German government debt and a
Federal Reserve official's remarks that the U.S. central bank
may only raise rates two times this year.
    "Overall it has been an extremely quiet session. The market
had a bit of a bid tracking Europe and (German) bunds earlier
today but quickly hit its highs early on and made back its
levels," said Justin Lederer, a Treasury analyst at Cantor
Fitzgerald in New York.
    German 10-year debt yields fell as low as 0.41
percent on Monday, the lowest since Dec. 28.
    Disappointing jobs data on Friday has also raised doubts
that the U.S. central bank will raise three times this year, as
Fed officials have indicated.
    Atlanta Fed President Raphael Bostic said on Monday the
central bank may only need to raise rates two or fewer times in
2018 given weak price pressures and possible loss of public
confidence in its ability to hit a 2 percent inflation target.

    Job growth slowed more than expected last month as retail
employment declined, but a pick-up in monthly wage gains fueled
hopes that inflation may be picking up.
    In separate remarks on Monday, San Francisco Fed President
John Williams said the central bank could better fight a
recession by committing to hold down interest rates longer to
keep average inflation on a steady upward path.
    Attention is focused on new supply as the U.S. Treasury
Department prepares to auction new three-year notes on Tuesday,
10-year notes on Wednesday and 30-year bonds on Thursday.
    Demand for three-year notes may be mixed given that the U.S.
central bank is expected to continue hiking interest rates. But
sales of long-term securities are expected to go well.
    "Since 10-years seem to be firmly entrenched in that 2.40
percent to 2.50 percent area, I would think that should have a
tendency to garner some interest," Mary Anne Hurley, vice
president of fixed income at D.A. Davidson in Seattle. "As for
30-years, there's lots of demand for longer-dated paper."
    The U.S. 10-year note yielded 2.478 percent at
2:44 p.m. (1744 GMT). The benchmark government bond last closed
at 2.476 percent.
    The three-year note yield, which is sensitive to
traders' views on Fed policy, stayed near the decade high of
2.07 percent reached earlier in the day.
    January 8 Monday 2:44PM New York / 1944 GMT
                               Price                  
 US T BONDS MAR8               151-24/32    -0-2/32   
 10YR TNotes MAR8              123-128/256  -0-4/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.39         1.414     0.010
 Six-month bills               1.545        1.5784    -0.011
 Two-year note                 99-214/256   1.96      0.000
 Three-year note               99-124/256   2.057     0.000
 Five-year note                99-66/256    2.2836    -0.001
 Seven-year note               99-8/256     2.4016    0.000
 10-year note                  98-4/256     2.4782    0.002
 30-year bond                  98-184/256   2.8136    0.004
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        18.50         0.25    
 spread                                               
 U.S. 3-year dollar swap        18.25         0.25    
 spread                                               
 U.S. 5-year dollar swap         4.00         0.00    
 spread                                               
 U.S. 10-year dollar swap       -1.50        -0.50    
 spread                                               
 U.S. 30-year dollar swap      -20.50        -0.25    
 spread                                               
 
 (Reporting by Kate Duguid; Editing by Alistiar Bell and Richard
Chang)
  

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