October 30, 2017 / 7:13 PM / 2 years ago

TREASURIES-Yields fall as Powell seen likely Fed chair pick

 (Adds Mnuchin comments, updates prices)
    * Data, Fed meeting, Fed chair announcement in focus
    * Treasury's Mnuchin sees low demand for ultra-long bonds

    By Karen Brettell
    NEW YORK, Oct 30 (Reuters) - U.S. Treasury yields fell on
Monday on news reports that U.S. President Donald Trump is
likely to appoint Federal Reserve Governor Jerome Powell, who is
viewed as more dovish than other contenders, as head of the
Federal Reserve.
    A source familiar with the matter said on Monday that Powell
is likely to replace Janet Yellen. Trump is expected to announce
his choice on Thursday, a White House official said separately.
    “You are getting a bull steepener, which suggests that the
market is pricing in slightly fewer rate hikes, which would be
consistent with Powell,” said Gennadiy Goldberg, an interest
rate strategist at TD Securities in New York.
    So-called bull steepening is when shorter-term rates, which
are more sensitive to interest rate hikes, fall at a faster pace
than longer-term bond yields.
    The yield curve between five-year notes and 30-year bonds
               steepened as high as 90.50 basis points, up from
88.8 basis points on Friday.
    Benchmark 10-year notes             gained 15/32 in price to
yield 2.37 percent, down from 2.43 percent on Friday.
    Bonds were also supported after Bloomberg reported that
lawmakers are considering a five-year plan to gradually phase in
corporate tax cuts, which would have the rate reach 20 percent
in 2022.             
    Investors have hoped that near-term tax cuts would boost
economic growth.
    Thirty-year bond yields fell to their lowest levels in a
week, reversing the earlier yield curve steepening, after
Bloomberg quoted Treasury Secretary Steven Mnuchin saying that
the government doesn't see a lot of demand for ultra-long bonds.
    Munchin added that the Treasury will continue to monitor
demand for the debt.
    Some analysts have expected that the government to introduce
a new ultra-long debt maturity as its funding needs increase.
    Bonds are expected to be volatile this week with numerous
market catalysts including a heavy slate of economic data, the
Treasury Department’s refunding plans, a Fed meeting and the
expected Fed chair announcement.
    “It is a very busy week, (with) a lot of potentially
market-moving events already on the calendar,” said Thomas
Simons, a money market economist at Jefferies in New York.
    The main economic focus this week is Friday’s U.S. jobs
report for October.
    The Fed is expected to leave interest rates unchanged when
it concludes its two-day policy meeting on Wednesday.
    The Treasury Department is also due to announce its funding
needs for the next two quarters on Wednesday.

 (Editing by Meredith Mazzilli and Nick Zieminski)
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below