August 17, 2017 / 6:29 PM / 2 years ago

TREASURIES-U.S. yields fall on doubts on fiscal stimulus, Barcelona attack

    * Rumor on top White House economic adviser unnerve
investors
    * Deadly van attack in Spain stokes safe-haven bids for
bonds
    * Investors brush off jobless claims, Philly Fed, output
data

 (Updates market action, adds quotes)
    By Richard Leong
    NEW YORK, Aug 17 (Reuters) - U.S. Treasury yields fell on
Thursday as investors, unnerved by a deadly attack in Barcelona
and speculation about a top White House economic adviser
quitting, favored safe, low-yielding bonds over stocks and other
risky assets.
    Rumors that Gary Cohn, director of the National Economic
Council, would resign began circulating on social media early
Thursday, sparking a sell-off on Wall Street and kindling
safe-haven demand for Treasuries, traders and analysts said.

    Cohn is seen leading the White House's effort on tax reform
and is a front-runner to possibly succeed Janet Yellen as head
of the U.S. Federal Reserve. Speculation that Cohn would quit
stoked concerns President Donald Trump would struggle to deliver
on his tax plan and other economic changes promised during his
campaign, they said.
    A White House official said Cohn "intends to remain in his
position."
    The denial failed to soothe investors who were already
jittery after Trump dismantled his two business advisory panels
on Wednesday. Several chief executives quit those groups after
Trump blamed weekend violence in Charlottesville, Virginia, on
both the anti-racism activists as well as white nationalists.
    
    "There's a lot of uncertainties. That's why we haven't
retraced back to where we were," said Gennadiy Goldberg,
interest rate strategist at TD Securities in New York.
    Investor anxiety intensified on news that a van mowed down a
crowd in Barcelona, in what police deemed a terrorist attack.
Local media reported at least 13 people were killed.

    At 2:17 p.m. (1817 GMT), benchmark 10-year Treasury yield
 was 2.206 percent, down 2.1 basis points from late
on Wednesday after hitting a session low of 2.197 percent. 
    Investors shrugged off data on U.S. jobless claims,
industrial output and regional business data from the
Philadelphia Federal Reserve, which supported the notion the
economy is expanding at a moderate pace in the third quarter.

    "We continue to grind along that 2 percent growth, which we
would expect to see going forward," said Craig Bishop, lead
strategist of U.S. fixed income strategies with RBC Wealth
Management in Minneapolis.
    This pace of U.S. economic expansion is keeping the Fed on
track to possibly announce next month it would shrink its $4.2
trillion worth of Treasuries and mortgage-backed securities
holdings, analysts said.
    On Thursday, Dallas Fed President Robert Kaplan at an event
in Lubbock, Texas, said the U.S. central bank would reduce its
bond holdings "in (the) near future."
  August 17 Thursday 2:18PM New York / 1818 GMT
                               Price                  
 US T BONDS SEP7               155-19/32    0-17/32   
 10YR TNotes SEP7              126-172/256  0-40/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.9875       1.0037    -0.010
 Six-month bills               1.1075       1.1292    -0.008
 Two-year note                 100-30/256   1.3139    -0.016
 Three-year note               100-20/256   1.4732    -0.011
 Five-year note                100-130/256  1.7674    -0.014
 Seven-year note               100-176/256  2.0184    -0.020
 10-year note                  100-104/256  2.2045    -0.020
 30-year bond                  99-60/256    2.7878    -0.019
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        27.00         1.50    
 spread                                               
 U.S. 3-year dollar swap        20.75         0.75    
 spread                                               
 U.S. 5-year dollar swap         7.50         0.25    
 spread                                               
 U.S. 10-year dollar swap       -5.00         0.00    
 spread                                               
 U.S. 30-year dollar swap      -34.00        -0.25    
 spread                                               
 
    

 (Reporting by Richard Leong; Editing by Bernadette Baum and
Richard Chang)
  
 
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