July 13, 2018 / 5:42 PM / 10 days ago

TREASURIES-U.S. bond prices higher, Fed emphasizes 'solid' growth

    * Fed releases report in advance of congressional testimony
    * Treasuries continue narrow trading range
    * Bid for European government bonds helps support U.S. debt

 (Updates trading, adds Fed, analyst quotes)
    By James Thorne
    NEW YORK, July 13 (Reuters) - Treasury prices moved higher
on Friday after the Federal Reserve reinforced views of strong
U.S. economic growth in a report to Congress.
    The Fed reiterated that it "expects that further gradual
increases" in interest rates would be appropriate given "solid"
growth. Fed Chairman Jerome Powell will answer questions on the
report before lawmakers on Tuesday and Wednesday.
    Rising bond prices in Europe helped to support demand for
Treasuries in early trading, analysts said. The safe-haven bid
appeared to be spurred by U.S. President Trump's criticism of UK
Prime Minister Theresa May's Brexit strategy, saying it killed
hopes of a U.S. trade deal.
    The yield curve on U.S. Treasuries once again reached its
flattest level in 11 years. The spread between 2-year and
10-year Treasury notes fell to 24.46 basis points.
    The relatively weak reception for the 3-year Treasury note
offering on Tuesday compared with stronger demand for
longer-dated debt auctions later in the week showed that
"investors were definitely in the long end of the curve," said
Justin Lederer, Treasury analyst at Cantor Fitzgerald in New
York.
    "The yield curve has continued to flatten just relentlessly
for the last two weeks even while the long end was locked in a
really tight range," said Guy LeBas, chief fixed income
strategist at Janney Montgomery Scott LLC in Philadelphia.
    U.S. benchmark 10-year notes have traded narrowly between
2.807 percent and 2.884 percent during the past two weeks.
    The yield on U.S. 10-year notes was 2 basis
points lower on the day at 2.833 percent.
    The Fed's Bank of Atlanta President Raphael Bostic was
scheduled to speak on Friday at 12:30 p.m. (1630 GMT) before the
Northern Chapter Virginia Society of Certified Public
Accountants.  

    July 13 Friday 1:20PM New York / 1720 GMT
                               Price                  
 US T BONDS SEP8               145-21/32    12/32     
 10YR TNotes SEP8              120-88/256   6/32      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.9375       1.9737    0.000
 Six-month bills               2.1125       2.1644    -0.001
 Two-year note                 99-214/256   2.5862    -0.008
 Three-year note               99-230/256   2.6605    -0.024
 Five-year note                99-132/256   2.73      -0.025
 Seven-year note               99-176/256   2.7996    -0.022
 10-year note                  100-92/256   2.8326    -0.020
 30-year bond                  103-180/256  2.9376    -0.012
         YIELD CURVE           Last (bps)   Net       
                                            Change    
                                            (bps)     
 10-year vs 2-year yield       24.50        -1.10     
 30-year vs 5-year yield       20.70        1.00      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        22.25        -1.00    
 spread                                               
 U.S. 3-year dollar swap        19.50         0.00    
 spread                                               
 U.S. 5-year dollar swap        14.00         0.25    
 spread                                               
 U.S. 10-year dollar swap        6.50        -0.25    
 spread                                               
 U.S. 30-year dollar swap       -4.00        -0.50    
 spread                                               
 
    
 (Reporting by James Thorne; editing by Jonathan Oatis and Dan
Grebler)
  
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