October 25, 2017 / 7:38 PM / a month ago

TREASURIES-Yields rise on upbeat U.S. data, Fed chair talk

    * Strong U.S. durables, housing data help boost yields
    * U.S. 5-year auction sees soft demand

 (Adds auction results, new analyst comment, updates prices,
table)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Oct 25 (Reuters) - U.S. Treasury yields climbed on
Wednesday, boosted by strong U.S. durable goods and new home
sales data as well as speculation about President Donald Trump's
nominee to head the Federal Reserve.
    Benchmark U.S. 10-year note yields hit seven-month highs,
while yields on 30-year bonds climbed to five-month peaks. U.S.
two-year note yields also advanced, hitting a nine-year high.
    Yields extended gains after data showing new orders for key
U.S.-made non-defense capital goods rose 1.3 percent last month.
Other data on Wednesday showed new single-family home sales
surging nearly 19 percent to a near 10-year high last month.

    Bill Northey, chief investment officer at U.S. Bank Wealth
Management in Helena, Montana said the rise in yields has been
supported by "a strong package of U.S. economic data." 
    Talk about Trump's potential nominee to lead the Fed has
also stirred the market. Current Fed Chair Janet Yellen,
Stanford University economist John Taylor, and Fed Governor
Jerome Powell were viewed as front-runners for the job.
    Taylor recently has gotten a lot of attention and his
emergence as a strong candidate was deemed a push for higher
interest rates, analysts said.
    Also on Wednesday, Treasury's auction of $34 billion in
5-year notes resulted in tepid demand. The yield was 2.058
percent, which was higher than expected at the bid deadline and
was also the highest since April 2011.
    There were nearly $83.1 billion in bids for a bid-to-cover
ratio of just 2.44, the lowest since June.
    The soft five-year note auction followed a similarly
lukewarm two-year note sale on Tuesday. 
    "The sell-off across the curve over the last month has been
something we have not seen for a long time," said Tom Simons,
money market economist at Jefferies & Co in New York. "So it's
tough to step in there and support new issuance when the market
is already soft."  
    On Thursday, Treasury will sell $28 billion in 7-year notes.
    In afternoon trading, 10-year U.S. Treasury note yields rose
to 2.440 percent, up from  Tuesday's 2.406 percent.
Earlier, 10-year yields rose to 2.475 percent, the highest since
March 21.
    U.S. 30-year bond yields were up at 2.951 percent
, from 2.923 percent late Tuesday. Thirty-year yields
earlier climbed to a five-month high of 2.980 percent.
    U.S. two-year note yields, meanwhile, were at 1.602 percent
, up from 1.577 percent the previous session. Two-year
yields earlier hit a fresh nine-year peak of 1.623  percent.

          October 25 Wednesday 3:07PM New York / 1907 GMT
                               Price                  
 US T BONDS DEC7               151          -0-22/32  
 10YR TNotes DEC7              124-124/256  -0-64/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.0925       1.1107    -0.015
 Six-month bills               1.2475       1.2729    0.000
 Two-year note                 99-202/256   1.6068    0.030
 Three-year note               99-176/256   1.7333    0.019
 Five-year note                99-42/256    2.0541    0.027
 Seven-year note               99-8/256     2.2768    0.032
 10-year note                  98-92/256    2.439     0.033
 30-year bond                  96-12/256    2.9502    0.027
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        22.25        -1.75    
 spread                                               
 U.S. 3-year dollar swap        22.50         0.25    
 spread                                               
 U.S. 5-year dollar swap         7.50         0.25    
 spread                                               
 U.S. 10-year dollar swap       -2.50        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -29.25         0.00    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrea
Ricci)
  

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