April 12, 2018 / 2:14 PM / 5 months ago

TREASURIES-Yields rise as Syria concerns ease after Trump comments

    By Gertrude Chavez-Dreyfuss
    NEW YORK, April 12 (Reuters) - U.S. Treasury yields climbed
on Thursday as risk appetite improved and geopolitical tensions
eased after President Donald Trump said a possible attack on
Syria may not be imminent, contrary to what he signaled on
Wednesday.
    Over the last couple of sessions, the U.S. bond market has
traded off political and international headlines, temporarily
superseding economic data. Even though the overall trend for
yields, which move inversely to prices, remained higher, the
movements have been much more narrow and contained.
    Referring to his threatened strike on Syria in response to a
suspected poison gas attack on a rebel enclave, Trump tweeted on
Thursday, "Never said when an attack on Syria would take place.
Could be very soon or not so soon at all!"
    His comment pushed benchmark U.S. 10-year note yields to a
one-week high, after a lackluster auction of the security on
Wednesday.
    "There is less immediate concern about military strikes or
action in Syria," Jim Vogel, interest rates strategist, at FTN
Financial in Memphis, Tennessee, said. 
    "It doesn't move it to the back-burner, but it allows you to
look around and trade other things and that gives room for rates
to rise just a little bit from their sort of cramped or
compressed levels," he added.
    Yields were also boosted by data showing U.S. initial
jobless claims dropped 9,000 to a seasonally adjusted 233,000
for the week ended April 7, reflecting continued improvement in
the labor market. Economists polled by Reuters had forecast
claims falling to 230,000 in the latest week.
    In morning trading, the U.S. 10-year yields rose to 2.821
percent, from 2.79 percent late on Wednesday.
    U.S. 30-year yields climbed to 3.036 percent,
from Wednesday's 3.005 percent.
    On the front end of the curve, U.S. 2-year yields were up at
 2.343 percent, compared with 2.311 percent on
Wednesday.
    Later in the session, the U.S. Treasury will auction $13
billion in reopened 30-year bonds, a day after the 10-year note
sale drew its lowest demand in nearly 1-1/2 years from so-called
"indirect bidders," which include fund managers and foreign
central banks. 
    "Today's 30-year auction offers less risk for bond investors
provided it clears the market below 3.04 percent," FTN's Vogel
said.
    
      April 12 Thursday 10:01AM New York / 1401 GMT
                               Price                  
 US T BONDS JUN8               145-15/32    -0-21/32  
 10YR TNotes JUN8              120-152/256  -0-64/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.705        1.7361    0.002
 Six-month bills               1.8975       1.9424    0.012
 Two-year note                 99-212/256   2.3398    0.029
 Three-year note               99-180/256   2.4784    0.027
 Five-year note                99-76/256    2.652     0.032
 Seven-year note               99-32/256    2.7639    0.033
 10-year note                  99-100/256   2.8211    0.031
 30-year bond                  99-88/256    3.0335    0.028
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        31.50         0.25    
 spread                                               
 U.S. 3-year dollar swap        25.50         0.25    
 spread                                               
 U.S. 5-year dollar swap        13.75         0.25    
 spread                                               
 U.S. 10-year dollar swap        3.50         0.00    
 spread                                               
 U.S. 30-year dollar swap      -13.50        -0.50    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss
Editing by Frances Kerry)
  
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