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TREASURIES-U.S. yields slip; Abu Dhabi bond sale boosts long-end yield
October 3, 2017 / 3:35 PM / in 19 days

TREASURIES-U.S. yields slip; Abu Dhabi bond sale boosts long-end yield

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Oct 3 (Reuters) - U.S. Treasury debt yields were
slightly lower on Tuesday in volatile trading as market
sentiment remained cautious two days after a mass shooting in
Las Vegas, with investors also continuing to weigh the prospects
of another interest rate hike this year.
    U.S. 30-year bond yields, which move inversely to prices,
were higher though, with investors absorbing a mammoth sovereign
bond deal from Abu Dhabi valued at $10 billion.
    Abu Dhabi sold its first ever 30-year sovereign bond on
Tuesday as part of a $10 billion triple-tranche debt issue that
drew heavy demand. Its issue of five-, 10- and 30-year
maturities had attracted more than $30 billion in demand.

    Tom di Galoma, managing director at Seaport Global Holdings
in New York, said the Abu Dhabi bond issue initially hurt the
market. "I think accounts are selling paper out in anticipation
of this deal."
    In mid-morning trading, the benchmark 10-year U.S. Treasury
note yield was 2.328 percent, down slightly from
2.332 percent late on Monday, while the 30-year yield
 was up at 2.871 percent compared with Monday's 2.865
percent.
    U.S. two-year notes were at 1.479 percent, down
from 1.487 percent on Monday.
    The Las Vegas shooting has remained on investors' radars,
analysts said.
    The Sunday night shooting spree from a 32nd-floor window of
the Mandalay Bay hotel, on the Las Vegas Strip, killed at least
59 people before the gunman turned a weapon on himself. More
than 500 people were injured, some trampled, in the deadliest
mass shooting in modern U.S. history.
    Seaport Holdings' di Galoma also said the bond market was
starting to turn its attention to the deliberations at the White
House over who might lead the Federal Reserve starting next
year.
    Aside from Fed Chair Janet Yellen, whose current term
expires in February, among those being considered are ex-Fed
Governor Kevin Warsh and current Fed Governor Jerome Powell.
Both Warsh and Powell were interviewed at the White House last
week.
    "Any Fed chair announcement that comes over the next two to
three weeks will be viewed as a hawkish announcement just
because Yellen is such a dove," said di Galoma. 
    "And so I think the market is starting to support the theme
that whoever becomes Fed chair will be raising rates faster than
Yellen would be," he added.
    Focus has also turned to this week's U.S. non-farm payrolls
report, which could shed more light on the chances of a December
rate increase.
    
  October 3 Tuesday 10:49AM New York / 1449 GMT
                               Price                  
 US T BONDS DEC7               152-21/32    -0-1/32   
 10YR TNotes DEC7              125-84/256   0-20/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.045        1.0624    0.018
 Six-month bills               1.1875       1.2113    -0.005
 Two-year note                 99-204/256   1.479     -0.008
 Three-year note               99-78/256    1.6174    -0.011
 Five-year note                99-196/256   1.9245    -0.010
 Seven-year note               99-196/256   2.1613    -0.010
 10-year note                  99-68/256    2.3336    -0.003
 30-year bond                  97-140/256   2.8728    0.008
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        26.25         0.75    
 spread                                               
 U.S. 3-year dollar swap        22.75         0.25    
 spread                                               
 U.S. 5-year dollar swap         7.75         0.00    
 spread                                               
 U.S. 10-year dollar swap       -4.75        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -32.75        -0.50    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss)
  

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