August 16, 2017 / 7:48 PM / 2 years ago

TREASURIES-U.S. yields fall on Fed minutes, Trump ending CEO panels

    * Trump dismantling of CEO panels raises worries about his
agenda
    * Fed minutes show policy-makers' growing unease on low
inflation
    * U.S. yields rise earlier on solid European growth data
    * ECB's Draghi mum on new policy message at Jackson Hole -
Reuters

 (Updates throughout, adds quote)
    By Richard Leong
    NEW YORK, Aug 16 (Reuters) - U.S. Treasury yields fell on
Wednesday, with benchmark yields retreating from one-week highs
as U.S. President Donald Trump's dissolving of two business
advisory groups and the Federal Reserve's record of its July
policy meeting raised economic worries.
    Trump's move came as several chief executives in those
groups quit following his response to the weekend of violence in
Virginia, which some perceived as supportive of white
supremacists. The dismantling of the panels shook investor
confidence in Trump's ability to enact the promises he made
during his presidential campaign, in particular tax reform.

    "It will be tough for his agenda to pass. Those worries grow
with the disbanding of the council and forum," Chris Gaffney,
President of EverBank World Markets in St. Louis, Missouri, said
of Trump's Manufacturing Council and Strategy and Policy Forum.
    Meanwhile, Fed policy-makers seemed more wary about the
softening in inflation, with some calling to stop further rate
increases until it is clear the trend was transitory, according
to Fed's minutes on its July 25-26 policy meeting.
    Interest rates futures implied traders saw a 45 percent
chance the Fed would raise rates at its December meeting
, down from 48 percent late Tuesday, CME Group's FedWatch
tool showed.  
    The benchmark 10-year Treasury note yield was
2.227 percent, down 4 basis points from late Tuesday, while the
30-year bond yield was 2.811 percent, nearly 3 basis
point lower from Tuesday's close, Reuters data showed.
    Treasury yields reached one-week peaks earlier Wednesday in
line with their European counterparts on stronger-than-forecast
annual growth in the euro zone. They have risen this week as
investors reduced safe-haven bond holdings due to easing
tensions between the United States and North Korea.

    Bond yields began receding following a Reuters report that
European Central Bank President Mario Draghi will not deliver a
new policy message at the Fed's Jackson Hole conference this
month.
    Traders had speculated Draghi might float the notion the ECB
would reduce its bond purchases later this year as the region's
economy has improved.
    "I think this is mildly bullish (for bonds), but I'm not
sure it changes much as far as guidance on tapering from
Draghi," said Aaron Kohli, interest rates strategist at BMO
Capital Markets in New York.
    U.S. yields retreated further after data showed domestic
home construction unexpectedly fell 4.8 percent in July, raising
doubts about the strength of the housing market in the third
quarter.
  August 16 Wednesday 3:37PM New York / 1937 GMT
                               Price                  
 US T BONDS SEP7               154-31/32    0-18/32   
 10YR TNotes SEP7              126-128/256  0-88/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.9975       1.0139    -0.020
 Six-month bills               1.115        1.1369    -0.013
 Two-year note                 100-22/256   1.3302    -0.021
 Three-year note               100-12/256   1.4839    -0.029
 Five-year note                100-112/256  1.7823    -0.037
 Seven-year note               100-140/256  2.0402    -0.044
 10-year note                  100-52/256   2.2272    -0.039
 30-year bond                  98-192/256   2.812     -0.028
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        25.75         0.50    
 spread                                               
 U.S. 3-year dollar swap        20.25         1.00    
 spread                                               
 U.S. 5-year dollar swap         7.25         0.50    
 spread                                               
 U.S. 10-year dollar swap       -5.00         0.25    
 spread                                               
 U.S. 30-year dollar swap      -33.75         0.00    
 spread                                               
 
 (Reporting by Richard Leong; Editing by Chizu Nomiyama and
James Dalgleish)
  
 
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