Markets News

UPDATE 2-TREASURIES-U.S. yields up as investors shrug off likely impeachment

 (New throughout, updates prices, market activity, comments and
Fed view)
    By Ross Kerber
    BOSTON, Dec 18 (Reuters) - U.S. Treasury yields rose on
Wednesday as investors shrugged off the likely impeachment of
U.S. President Donald Trump and focused on positive economic
    The benchmark 10-year yield was up 3.1 basis
points to 1.9204% in afternoon trading. It has risen steadily
over the course of the month from a low of 1.6930% on Dec 3, a
trend analysts said pointed to a relatively stable economic
    "The global trend has been things getting less bad," said
Evan Brown, head of multi-asset stretegy for UBS Asset
    "It's a general appreciation by markets that the global
economy is healing and the flight to safety we saw earlier this
year is dissipating," he said.
    The U.S. House of Representatives on Wednesday was likely to
impeach Trump on charges of abusing his office and obstructing a
congressional probe.
    In theory, the step could shake confidence in Treasuries.
But the political action appears already priced in with the U.S.
Senate unlikely to convict Trump, said Andrew Brenner, head of
international fixed income at NatAlliance Securities. 
    Various bits of positive economic news in recent days have
raised investor confidence and led to bond sell-offs, Brenner
    He cited a survey showing German business morale rising in
December to a six-month high, and a Commerce Department report
on Tuesday showing surprisingly strong U.S. homebuilding
activity in November. 
    "There are green shoots" in the economy, he said.
    Priya Misra, head of global rates strategy for TD
Securities, said another factor diminishing the economic
influence of impeachment is that Congress and the White House
have made progress on areas like a budget deal and trade
agreements with China and Mexico.
    "Perhaps impeachment has made it more likely that policy is
not at gridlock," she said.
    Euro zone bond yields steadied in quiet trading after
falling on renewed anxiety about Brexit. Britain on Tuesday set
a hard deadline of December 2020 to reach a trade deal with the
European Union.
    On Wednesday, New York Fed President John Williams expressed
an optimistic outlook in an interview with CNBC.
    "I feel very good about how the economy's been this year,
how it's progressed and feel very good about how it's going to
look next year," Williams said.
    The two-year yield, which typically moves in step
with interest rate expectations, was unchanged at 1.6328%.
        December 18 Wednesday 2:51PM New York / 1951 GMT Price        Current   Net
                                            Yield %   Change
 Three-month bills             1.5275       1.559     -0.013
 Six-month bills               1.5375       1.5754    -0.003
 Two-year note                 99-191/256   1.6328    0.000
 Three-year note               99-224/256   1.668     0.011
 Five-year note                98-228/256   1.7349    0.024
 Seven-year note               98-132/256   1.8536    0.031
 10-year note                  98-120/256   1.9204    0.031
 30-year bond                  100-156/256  2.3465    0.030
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         6.75         1.25    
 U.S. 3-year dollar swap         2.00         0.25    
 U.S. 5-year dollar swap        -1.25        -0.25    
 U.S. 10-year dollar swap       -5.25         0.00    
 U.S. 30-year dollar swap      -30.00         0.00    
 (Editing by Nick Zieminski, Richard Chang and David Gregorio)