November 29, 2017 / 4:14 PM / in 17 days

TREASURIES-U.S. yields lifted by upbeat Yellen, strong growth data

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 29 (Reuters) - U.S. Treasury yields rose
across most maturities on Wednesday bolstered by upbeat remarks
on the economy by Federal Reserve Chair Janet Yellen and data
showing stronger than expected U.S. economic growth for the
third quarter.
    U.S. 10-year note and 30-year bond yields, which move
inversely to prices, climbed to two-week peaks, while those on
two-year notes advanced to a more than one-week peak after
hitting a nine-year high last week.
    Cheng Chen, interest rates strategist at TD Securities in
New York, attributed the rise in yields to Yellen's hawkish
comments.
    "Yellen was kind of optimistic about the economy," said
Chen. "She's basically saying that strong growth would drive
inflation higher and I think that's one of the drivers for the
market moves today."
    In what may be one of her last public appearances before
leaving the Fed chair early next year, Yellen said on Wednesday
a strengthening U.S. economy will warrant continued interest
rate increases. She made the remarks before U.S. congressional
leaders.
    Data showing that U.S. gross domestic product expanded at a
3.3 percent annual rate in the third quarter further boosted
yields. That was the quickest pace of U.S. growth in three
years, as increases in business investment in inventories and
equipment offset a moderation in consumer spending.
    "After a good third-quarter, the survey and early monthly
evidence point to another decent gain in GDP in the fourth
quarter of between 2.5 percent and 3.0 percent annualized," said
Paul Ashworth, chief U.S. economist, Capital Economics in
Toronto.
    In mid-morning trading, the 10-year Treasury yield
 was up at 2.386 percent, from 2.337 percent late on
Tuesday. It hit a two-week high of 2.395 percent.
    U.S. two-year yields, which climbed to a
nine-year peak last week, were at 1.774 percent from 1.758
percent on Tuesday. Two-year yields, the most sensitive maturity
to rate hike expectations, touched a one-week peak of 1.778
percent.
    U.S. 30-year bond yields were up at 2.827
percent from Tuesday's 2.765 percent. Earlier, 30-year yields
hit a two-week high of 2.837 percent. 
    Tom di Galoma, managing director at Seaport Global Holdings
in New York also attributed part of the selling in Treasuries
that bolstered yields to the sell-off in UK bonds.
    British 10-year government bond yields rose by
the most in a day since June, lifted  by reports Britain was
close to a deal with the European Union on how much it needs to
pay to exit the bloc.
    The yield on 10-year gilts rose by as much as 10 basis
points to 1.357 percent, their highest level in almost a month.

    
      November 29 Wednesday 10:50 AM New York/1550 GMT
                               Price                  
 US T BONDS DEC7               153-5/32     -1-4/32   
 10YR TNotes DEC7              124-156/256  -0-92/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.2725       1.2943    -0.003
 Six-month bills               1.4225       1.4527    0.005
 Two-year note                 99-244/256   1.774     0.016
 Three-year note               99-166/256   1.8726    0.025
 Five-year note                99-128/256   2.1059    0.040
 Seven-year note               98-252/256   2.2828    0.053
 10-year note                  98-208/256   2.3846    0.048
 30-year bond                  98-120/256   2.8261    0.061
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        17.25         0.00    
 spread                                               
 U.S. 3-year dollar swap        17.50         0.25    
 spread                                               
 U.S. 5-year dollar swap         6.00        -0.50    
 spread                                               
 U.S. 10-year dollar swap       -0.75         0.25    
 spread                                               
 U.S. 30-year dollar swap      -24.00        -0.50    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrew Hay)
  

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