March 14, 2019 / 8:18 PM / 6 months ago

TREASURIES-U.S. prices fall on Japan selling, corporate bond supply

    * British lawmakers vote for Brexit delay
    * Japan selling ahead of fiscal year-end a market
    * Little impact from mixed U.S. economic data

 (Recasts, adds comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, March 14 (Reuters) - U.S. Treasury prices dropped
on Thursday in quiet trading overall, with the sharpest falls
seen on the long end of the curve, pressured by corporate debt
supply and some selling from Japanese investors ahead of Japan's
fiscal year end this month.
    "There could be selling by Japanese investors on the long
end," said Kim Rupert, managing director of global fixed income,
at Action Economics in San Francisco.
    Japanese investors tend to sell foreign bonds and repatriate
the proceeds ahead of their fiscal year end in an effort to
bolster their balance sheets.
    Analysts also said heavy corporate bond issuance this week
as well as in upcoming weeks has also been a factor in the
Treasuries' sell-off.
    It has been a busy week for the investment-grade market, 
with 18 deals priced so far this week. Tighter credit spreads
and a relatively stable stock market have contributed to the
    Analysts said the overall bias of the market has been for 
higher Treasury yields amid what is known as "rate-lock selling"
during an expected heavy corporate issuance calendar.
    Wall Street dealers typically lock in borrowing costs for
corporate bonds they are underwriting by selling Treasuries as a
hedge before the deal is completed. Once the bond is sold, the
dealer buys back Treasuries to exit the rate lock.
    Aside from corporate supply, the market has also been able
to absorb $78 billion in U.S. Treasury debt this week, and there
has been a little bit of aftereffect from that. Investors tend
to sell Treasuries going into these auctions in order to secure
a lower price when the sale begins.
    In afternoon trading, U.S. 10-year note prices fell, as
yields rose to 2.628 percent from 2.610 percent late
on Wednesday.
    U.S. 30-year bond yields were up at 3.044 percent
 from 3.01 percent on Wednesday.
    On the short end, U.S. 2-year yields advanced to 2.462
percent, compared with Wednesday's 2.453 percent.
    Also on Thursday, British lawmakers voted overwhelmingly to
seek a delay in Britain's exit from the European Union, setting
the stage for Prime Minister Theresa May to renew efforts to get
her divorce deal approved by parliament next week.
    "The possible delay in Brexit takes away some of the
uncertainty and adds the possibility of ending up having another
referendum and possibly staying in," said Ellis Phifer, market
strategist, at Raymond James in Memphis, Tennessee.
    Meanwhile, data showing a rise in U.S. weekly jobless claims
and a sharp decline in new home sales had minimal impact on
Treasuries, but they do support expectations that the Federal
Reserve will hold interest rates throughout the year.

    March 14 Thursday 4:03 PM New York / 2003 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             2.3975       2.4455    -0.007
 Six-month bills               2.45         2.515     -0.010
 Two-year note                 100-18/256   2.4627    0.010
 Three-year note               99-224/256   2.4184    0.010
 Five-year note                99-190/256   2.4304    0.016
 Seven-year note               99-216/256   2.5245    0.020
 10-year note                  99-248/256   2.6285    0.019
 30-year bond                  99-32/256    3.0447    0.035
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        11.00        -0.25    
 U.S. 3-year dollar swap         9.50         0.50    
 U.S. 5-year dollar swap         6.50         0.00    
 U.S. 10-year dollar swap        1.00         0.00    
 U.S. 30-year dollar swap      -22.25        -1.00    
 (Reporting by Gertrude Chavez-Dreyfuss; editing by Jonathan
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