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TREASURIES-U.S. yields fall ahead of Fed chair announcement
November 2, 2017 / 3:45 PM / in 2 months

TREASURIES-U.S. yields fall ahead of Fed chair announcement

 (New throughout, updates prices, market activity and comments,
adds Fed statement)
    * Doubts about passage of Republicans' U.S. tax plan
    * Trump seen picking Powell as next U.S. Fed chief
    * BOE raises U.K. rates for the first time in a decade
    * U.S. productivity raises at quickest pace in three years

    By Richard Leong
    NEW YORK, Nov 2 (Reuters) - U.S. Treasury yields fell on
Thursday with longer-dated yields hitting near two-week lows as
investors await President Donald Trump's possible announcement
of Jerome Powell as the next head of the Federal Reserve.
    Bond yields initially declined in step with lower U.K.
yields after the Bank of England hiked policy rates for the
first time in a decade and signaled it would adopt a gradual
approach to increase rates further.
    Treasury yields decreased further as losses among Wall
Street shares deepened when investors took in details of the
Republican plan.
    Analysts said there were doubts about whether tax cuts could
be passed.
    "It's going to have a hard time passing in its current
form," said Aaron Kohli, an interest rate strategist with BMO
Capital Markets in New York. "It's not clear how it's going to
be paid for."
    At 11:27 a.m. ET (1527 GMT), benchmark 10-year Treasury
yield was 2.349 percent, down 3 basis points on the
day, while the 30-year yield was 3 basis points
lower at 2.831 percent.
    The yield curve between five-year notes and 30-year bonds
 was 83.1 basis points, over 1 basis point above
its flattest level last seen in late 2007 which was reached on
Wednesday.
  
  
    The drop in U.S. yields was capped in advance of Trump's
announcement of his Fed chief pick at 3 p.m. (1900 GMT) and the
government's payrolls report for October on Friday.
    Powell, who sits on U.S. central bank's board, is seen as a
figure who would stick with the monetary policy stance favored
by current Fed Chair Janet Yellen, whose term expires in
February.
    Financial markets are expected to move little if Powell were
selected by Trump.
    "The market has priced in for Powell," Kohli said.
    On the data front, U.S. worker productivity increased at a
3.0 percent annualized rate in the third quarter for its fastest
pace in three years, while weekly first-time filings on jobless
benefit fell to their lowest in 44-1/2 years.
    These latest figures supported the view the Fed would raise
rates at its Dec. 12-13 policy meeting.
    The Bank of England as expected increased its policy rate
for the first time in more than 10 years, lifting it to 0.5
percent.
   
 November 2 Thursday 11:28AM New York / 1528 GMT
                               Price                  
 US T BONDS DEC7               153-13/32    0-21/32   
 10YR TNotes DEC7              125-28/256   0-52/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.1475       1.1668    0.000
 Six-month bills               1.2675       1.2933    -0.003
 Two-year note                 99-200/256   1.612     -0.008
 Three-year note               99-182/256   1.7259    -0.016
 Five-year note                99-254/256   2.0016    -0.021
 Seven-year note               100-72/256   2.2063    -0.025
 10-year note                  99-32/256    2.3505    -0.025
 30-year bond                  98-84/256    2.8334    -0.028
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        21.25        -0.50    
 spread                                               
 U.S. 3-year dollar swap        20.75        -0.25    
 spread                                               
 U.S. 5-year dollar swap         7.50         0.50    
 spread                                               
 U.S. 10-year dollar swap       -2.00         0.25    
 spread                                               
 U.S. 30-year dollar swap      -26.25         0.50    
 spread                                               
 
    
 (Reporting by Richard Leong; Editing by David Gregorio)
  
 

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