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TREASURIES-U.S. yields drift higher after Senate vote on tax bill
November 28, 2017 / 9:06 PM / 18 days ago

TREASURIES-U.S. yields drift higher after Senate vote on tax bill

 (Recasts, adds comment; updates prices, table)
    * Senate votes to advance U.S. tax bill
    * North Korea launches missile test near Japan
    * U.S. consumer confidence soars to 17-year high

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 28 (Reuters) - U.S. Treasury  yields inched
higher on Tuesday, as risk appetite improved with Wall Street
shares hitting record highs after upbeat consumer confidence
data and a Senate panel vote to advance a U.S. tax bill.
    The full Senate is expected to begin debating the tax bill
and vote on it sometime this week. The House of Representatives
has already approved its own version of tax-cut legislation. The
two versions would need to be reconciled before a measure could
go to Trump for his signature.
    "That vote was previously penciled in for Thursday, assuming
all went according to plan. Looks like this may be behind the
late rebound in stocks, yields and the dollar," said Action
Economics.
    The yield curve also steepened after hitting its flattest in
a decade, in what analysts viewed as a much-needed reprieve from
months of flattening.
    The yield curve has been on a flattening trend for most of
the year, as investors priced in an interest rate hike by the
Federal Reserve in December and a few more in 2018.
    "We see a steepening as a well-needed respite from the
torrid pace of flattening we've witnessed in the last few
weeks," said Ian Lyngen, head of U.S. rates strategy, at BMO
Capital Markets in New York.
    The gap between U.S. two-year note and U.S. 10-year note
yields widened slightly on Tuesday to 57.90 basis points
, after contracting to the tightest since October
2007 on Monday. 
    The difference between five-year and 30-year yields rose to
as much as 72.80 basis points, the widest in a
week. The gap was last at 69.80 basis points. 
    Treasury yields earlier ticked higher after data showed a
surge in U.S. consumer confidence to a 17-year high. Inflation
expectations, however, slipped again to 4.5 percent and are
currently at the bottom of their recent range.
    In late trading, the 10-year Treasury yield was
up at 2.336 percent, from 2.328 percent late on Monday.
    U.S. two-year yields, which climbed to a
nine-year peak last week, were at 1.754 percent from 1.745
percent on Monday.
    U.S. 30-year bond yields were up slightly at
2.766 percent from Monday's 2.765 percent.
    Yields briefly fell after news North Korea launched a
missile that landed close to Japan on Wednesday, the first since
a missile fired over its neighbor in mid-September.
    
      November 28 Tuesday 3:48PM New York / 2048 GMT
                               Price                  
 US T BONDS DEC7               154-8/32     -0-3/32   
 10YR TNotes DEC7              124-252/256  -0-36/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.275        1.2969    0.041
 Six-month bills               1.4175       1.4476    0.001
 Two-year note                 99-254/256   1.754     0.009
 Three-year note               99-186/256   1.8452    0.008
 Five-year note                99-176/256   2.0661    0.019
 Seven-year note               100-36/256   2.2278    0.015
 10-year note                  99-60/256    2.3365    0.008
 30-year bond                  99-168/256   2.7669    0.002
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        17.00        -0.75    
 spread                                               
 U.S. 3-year dollar swap        17.25        -0.50    
 spread                                               
 U.S. 5-year dollar swap         6.50        -0.50    
 spread                                               
 U.S. 10-year dollar swap       -1.00         0.00    
 spread                                               
 U.S. 30-year dollar swap      -23.50         0.25    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Meredith
Mazzilli and Chris Reese)
  

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