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TREASURIES-U.S. bond yields rise on run-up to Fed minutes, profit-taking
May 21, 2014 / 2:35 PM / 3 years ago

TREASURIES-U.S. bond yields rise on run-up to Fed minutes, profit-taking

* Fed minutes eyed for rate hike remarks
    * Traders favor short-dated notes
    * Profit-taking hits longer-dated bonds

    By Sam Forgione
    NEW YORK, May 21 (Reuters) - Medium- and longer-dated U.S.
Treasuries yields rose on Wednesday on anticipation that minutes
from the Federal Reserve's April policy meeting could suggest
the central bank will raise interest rates more slowly than
expected.
    Profit-taking after a recent rally also sent yields higher.
    Traders said U.S. Treasury notes maturing between 2-5 years
were more attractive than 10-year Treasury notes and 30-year
Treasury bonds in the event of a slower path of rate hikes. The
FOMC minutes are set for release at 2:00 pm EDT (1800 GMT).
    "There's a concern that rates will rise much more slowly
than the market is anticipating," said Sean Murphy, Treasuries
trader at Societe Generale in New York. 
    Shorter-term Treasury notes, which are more vulnerable to a
hike in interest rates, had also become more insulated since New
York Federal Reserve President William Dudley said Tuesday that
the central bank would likely be "relatively slow" in hiking
rates, traders said. 
    They sold 30-year Treasuries bonds to book profits after
their prices rose and yields hit 3.303 percent last Thursday,
the lowest level since last June. Remaining short bets against
Treasuries also kept 30-year yields well above 3.3 percent,
traders said. 
    Benchmark 10-year U.S. Treasury notes also came under
selling pressure after yields hit 2.473 percent last Thursday,
the lowest level since late October.
    "The rally in the long end specifically has gotten a little
bit long in the tooth," said Gabriel Mann, U.S. Treasuries
strategist at RBS Securities in Stamford, Connecticut. "Market
participants seem to want to defend the 3.3 percent yield on the
30-year bond and the 2.47 percent yield on the 10-year."
    Prices on 30-year Treasury bonds were last down
27/32 to yield 3.42 percent, from 3.375 percent late Tuesday.
Benchmark 10-year Treasury notes were last down
10/32 in price to yield 2.54 percent, from 2.509 percent late
Tuesday. 
    Prices on two-year Treasury notes traded down
just 1/32 to yield 0.35 percent, from 0.33 percent late Tuesday.
    On Wall Street, U.S. stocks opened higher, with the S&P 500
last up 0.62 percent and on track to rebound from a broad
sell-off in the prior session. 

 (Reporting by Sam Forgione; Editing by Dan Grebler)

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