September 26, 2019 / 2:19 PM / 2 months ago

TREASURIES-U.S. yields slide after whistleblower complaint on Trump

    * Long-dated yields fall to day's lows after whistleblower
    * Whistleblower says Trump sought Ukraine's help in 2020
    * U.S. data impact overshadowed by complaint
    * U.S. Treasury to sell $32 bln in 7-year notes

 (Adds details, analyst comment, Treasuries table, byline,
updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 26 (Reuters) - U.S. Treasury yields dropped
on Thursday after the House Intelligence Committee released a
whistleblower complaint that accused President Donald Trump of
pressing a foreign government to investigate one of his main
political rivals in next year's presidential election.
    Yields on long-dated U.S. debt fell to session lows
following the release of the complaint. Overall, 10-year and
30-year yields declined in eight of the last nine sessions.
    The complaint said Trump pressed Ukrainian President
Volodymyr Zelenskiy to investigate former Vice President Joe
Biden to advance Trump's personal interest.
    Saying that more than six White House officials had made
contact about Trump's communication with Ukraine, the report
cited concerns that efforts to put pressure on Ukraine "pose
risks to U.S. national security," undermining efforts "to deter
and counter foreign interference in U.S. elections."            
    "I would attribute the rally in Treasuries to the
whistleblower complaint, just the concerns surrounding that,"
said Justin Lederer, Treasury analyst at Cantor Fitzgerald in
New York.
    "The transcript of his call released yesterday did not seem
to have anything specific that Trump said, 'do this for that.'
The whistleblower complaint looks like there was more to it, but
I don't know. Overall, it's just the idea that markets don't
like uncertainty," he added. 
    According to a summary of a telephone call released by the
Trump administration on Wednesday, Trump pressed Ukraine's
leader to investigate Democratic presidential front-runner Joe
Biden, in coordination with the U.S. attorney general and
Trump's personal lawyer.
    Earlier this week, U.S. House of Representatives Speaker
Nancy Pelosi said the Democratic-led House was moving forward
with an official impeachment inquiry against Trump, saying no
one was above the law.
    Cantor's Lederer said investors are concerned about the
ramifications of an impeachment inquiry, how it plays into the
China trade negotiations and U.S. budget deals.
    In morning trading, U.S. 10-year note yields
fell to 1.683% from 1.732% late on Wednesday.
    Yields on 30-year bonds were also lower at
2.132%, from 2.1835 on Wednesday. 
    U.S. two-year yields were down at 1.635%, from
Wednesday's 1.683%.
    The whistleblower complaint overshadowed U.S. economic
reports that were largely in line with expectations, although
some of the details were on the weak side.
    Gross domestic product increased at an unrevised 2.0% rate
in the second quarter. It expanded 2.6% in the first half of the
year. U.S. business investment though contracted more sharply
than previously estimated in the second quarter and corporate
profit growth was tepid.
    Later on Thursday, the Treasury will sell $32 billion in
seven-year notes. The previous two auctions this week had mixed
results: the sale of two-year notes showed strong demand, while
that of seven-year notes had a lackluster outcome. 
      September 26 Thursday 9:59 AM New York/1359 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             1.84         1.8793    -0.016
 Six-month bills               1.84         1.8881    -0.018
 Two-year note                 99-180/256   1.6515    -0.031
 Three-year note               99-194/256   1.5838    -0.035
 Five-year note                99-162/256   1.5767    -0.037
 Seven-year note               98-78/256    1.6348    -0.032
 10-year note                  99-84/256    1.6991    -0.033
 30-year bond                  102-16/256   2.156     -0.027
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        -1.50         0.25    
 U.S. 3-year dollar swap        -3.00         1.00    
 U.S. 5-year dollar swap        -7.00         0.25    
 U.S. 10-year dollar swap      -12.75         0.50    
 U.S. 30-year dollar swap      -43.00         1.00    
 (Reporting by Gertrude Chavez-Dreyfuss
Editing by Peter Graff and Nick Zieminski)
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