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Bonds News

TREASURIES-Yields rise as Japan stimulus promise boosts stocks

* Yields rise as stocks gain on Japanese stimulus promise
    * Treasury to sell $24 bln three-year notes Monday

    By Karen Brettell
    NEW YORK, July 11 (Reuters) - U.S. Treasury yields rose on
Monday after Japan prepared a new round of stimulus, which
boosted risky assets including stocks and reduced demand for
safe-haven U.S. bonds, and as investors prepared for $56 billion
in new coupon-bearing supply this week.
    Japanese Prime Minister Shinzo Abe ordered new stimulus, but
did not give details on the size of the package, causing
Japanese stocks to jump nearly 4 percent and the yen to weaken.
 
    Risk appetite was also boosted by news that Ben Bernanke, a
former Federal Reserve chairman and architect of the U.S.
quantitative easing programs, visited the Bank of Japan on
Monday. 
    "There was some news that Bernanke was visiting the BOJ,
which was more than enough to drive a big rally in risk," said
Aaron Kohli, an interest rate strategist at BMO Capital Markets
in New York.
    Benchmark 10-year notes were last down 14/32
in price to yield 1.410 percent, up from 1.365 percent late on
Friday.
    The yields had hit record lows of 1.321 percent last
Wednesday on fears about slowing global growth, which were
intensified by Britain's vote last month to leave the European
Union.
    Three-year note yields also rose on Monday before the U.S.
Treasury Department is due to sell $24 billion in new three-year
supply, the first auction of $56 billion in coupon-bearing debt
this week.
    Three-year notes are highly sensitive to expectations of
interest rate increases, and have underperformed other
maturities after Friday's strong employment report for June
indicated that an interest rate hike this year may still be
likely.
    Traders expect the new notes to price with yields of 0.757
percent, according to the "when-issued" market < US3YTWI=TWEB>,
around one-and-a-half basis points higher than where the notes
were trading in the secondary market.
    The Treasury will also sell $20 billion of 10-year notes on
Tuesday and $12 billion of 30-year bonds on Wednesday.
    Wall Street's top banks were almost evenly split over
whether the Fed would raise U.S. interest rates in 2016, with a
poll following Friday's strong jobs data showing a razor-thin
majority expect the central bank to raise rates once by the end
of the year. 

 (Editing by Nick Zieminski)
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