December 22, 2017 / 3:44 PM / 10 months ago

TREASURIES-U.S. bond yields firm in light, pre-Christmas trading

    * U.S. yield curve set for biggest weekly steepening since
July
    * New home sales, consumer spending data suggest solid U.S.
growth
    * U.S. bond market to shut at 2 p.m. (1900 GMT), to close
Monday

 (Updates market action, adds quote)
    By Richard Leong
    NEW YORK, Dec 22 (Reuters) - U.S. Treasury yields rose
modestly on Friday with benchmark yields staying below their
nine-month peak as investors moved to the sidelines before
Christmas.
    The yield curve, while mildly flatter on the day, was on
track for its largest weekly steepening since July after the
U.S. Congress approved the most sweeping change in the U.S. tax
code in 30 years on Wednesday. The tax plan has stoked
expectations of greater business investments and a $1.5 trillion
increase to the national debt in the next decade.
    The U.S. bond market will close early at 2 p.m. (1900 GMT)
on Friday and stay shut on Monday, Christmas Day. Many European
markets will remain closed next Tuesday.
    "Too many people are out. We are not going to have a lot of
people putting on big positions at year-end," said Ed
Al-Hussainy, senior interest rate and currency analyst at
Columbia Threadneedle in Minneapolis.
    Traders brushed off Friday's spate of domestic data on
durable goods orders, personal spending, new home sales and
consumer sentiment. Collectively, these latest figures pointed
to a solid pace of economic expansion in the fourth quarter even
before corporate and individual tax cuts go into effect in 2018.

    At 10:30 a.m. (1530 GMT) the 10-year Treasury yield
 was 2.488 percent, up half a basis point on the day.
It reached a nine-month high of 2.504 percent on Thursday.
    Two-year yield reached a nine-year high of 1.895
percent before pulling back to 1.891 percent, up 1 basis points
from late Thursday.
    Earlier Friday, the five-year yield touched 2.254
percent, which was the highest since April 2011, Reuters data
showed.
    The five-year to 30-year part of the yield curve
 was marginally flatter at 59.0 basis points. It
hit 51.9 basis points on Monday which was the flattest level
since October 2007, Reuters and Tradeweb data showed. 
    On the week, the gap between five-year and 30-year yields
grew by nearly 6 basis points, which would be the biggest such
move since mid-July.
    Dec. 22 Friday 10:31 A.M. New York / 1531 GMT
                               Price                  
 US T BONDS MAR8               150-30/32    -0-8/32   
 10YR TNotes MAR8              123-124/256  -0-8/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.325        1.3477    -0.005
 Six-month bills               1.5025       1.5347    -0.005
 Two-year note                 99-188/256   1.8906    0.013
 Three-year note               99-162/256   2.0029    0.006
 Five-year note                98-214/256   2.2507    0.006
 Seven-year note               98-68/256    2.3981    0.003
 10-year note                  97-236/256   2.4883    0.005
 30-year bond                  98-28/256    2.8442    0.010
         YIELD CURVE           Last (bps)   Net       
                                            Change    
                                            (bps)     
 10-year vs 2-year yield       59.50        -0.50     
 30-year vs 5-year yield       59.20        -0.30     
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        20.25         0.00    
 spread                                               
 U.S. 3-year dollar swap        18.75         0.25    
 spread                                               
 U.S. 5-year dollar swap         4.25        -0.25    
 spread                                               
 U.S. 10-year dollar swap       -2.50        -0.75    
 spread                                               
 U.S. 30-year dollar swap      -22.00        -1.00    
 spread                                               
 
       

    
 (Reporting by Richard Leong; editing by Grant McCool)
  
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