September 25, 2019 / 3:25 PM / 25 days ago

TREASURIES-U.S. yields advance as investors shrug off Trump impeachment concerns

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 25 (Reuters) - U.S. Treasury yields rose on
Wednesday after falling for seven straight sessions, bolstered
by strong housing data and as investors largely shrugged off
concerns about the possible impeachment of President Donald
Trump.
    On Tuesday, U.S. House of Representatives Speaker Nancy
Pelosi said the Democratic-led House was moving forward with an
official impeachment inquiry against Trump, saying no one was
above the law. 
    The House will examine whether Trump sought Ukraine’s help
to smear former Vice President Joe Biden, the front-runner for
the 2020 Democratic presidential nomination, Pelosi said.
    A summary of a July phonecall on Wednesday showed that Trump
had asked Ukrainian President Volodymyr Zelenskiy to investigate
Biden and a company that employed his son.
    "The impeachment is not a big issue until you get into a
recession. It's a big deal politically, but it's not a big deal
economically," said Stan Shipley, fixed income strategist, at
Evercore ISI in New York.
    "Let's say you did impeach the president, which is very
unlikely, and you did convict him. Then trade wars will probably
look a lot better because whoever is going to replace him is not
going to be as hard-nosed on trade as he is," he added.
    Karissa McDonough, chief fixed income strategist, at
People's United Advisors in Burlington, Vermont added that
political uncertainty overall -- whether it's impeachment or
trade -- has already been priced in by the market for some time.
    "It's probably just a marginal impact. Maybe that's worth a
couple of basis points," she said.
    Also boosting yields was an upbeat U.S. housing report,
analysts said. Data showed sales of new single-family homes
rebounded more than expected in August by 7.1% to a seasonally
adjusted annual rate of 713,000 units.
    July's sales pace was revised up to 666,000 units from the
previously reported 635,000 units.
    In late morning trading, U.S. 10-year note yields
 rose to 1.685% from 1.635% late on Tuesday.
    Yields on 30-year bonds were also higher at
2.134%, from 2.095% on Tuesday.
    U.S. two-year yields were up at 1.645%, from
Tuesday's 1.594%.
    Later on Wednesday, the Treasury auctions $41 billion in
five-year notes and $18 billion in two-year floating rate notes.
    Analysts believe there should be decent demand for five-year
notes.
    "Even after the rally which has characterized the beginning
of this week, the early September selloff across the Treasury
market has incorporated a solid concession for all three of this
week's supply events which will benefit 5s (five-year notes)
today," BMO Capital Markets said in a research note
    
      September 25 Wednesday 10:59AM New York / 1459 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.8925       1.9333    0.002
 Six-month bills               1.87         1.9193    0.005
 Two-year note                 99-174/256   1.6635    0.069
 Three-year note               99-182/256   1.6       0.068
 Five-year note                98-114/256   1.5791    0.068
 Seven-year note               98-72/256    1.6384    0.062
 10-year note                  99-84/256    1.6991    0.064
 30-year bond                  102-84/256   2.144     0.049
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        -2.25        -0.25    
 spread                                               
 U.S. 3-year dollar swap        -4.50        -0.75    
 spread                                               
 U.S. 5-year dollar swap        -7.25        -0.25    
 spread                                               
 U.S. 10-year dollar swap      -13.25         0.00    
 spread                                               
 U.S. 30-year dollar swap      -43.75         0.00    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Bernadette
Baum)
  
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