Prices soft to near flat ahead of Fed decision on rates
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Prices soft to near flat ahead of Fed decision on rates
* U.S. 3-, 10-year note auctions show mixed results
* NY City bombing attempt prompts safe-haven buying earlier
* Fed expected to raise interest rates on Wednesday
* Inflation data on Wednesday key data focus

(Recasts; updates prices, adds comment, table)
By Gertrude Chavez-Dreyfuss and Karen Brettell
NEW YORK, Dec 11 (Reuters) - U.S. Treasury debt prices were
little changed on Monday after rallying earlier in the session
on safe-haven buying following an explosion in midtown Manhattan
which New York Mayor Bill de Blasio described as an "attempted
terrorist attack."
The U.S. Treasury Department held two auctions - three-year
and 10-year notes - that showed mixed results. Both elicited
little market reaction, however.
Overall investors were hesitant to extend current positions
ahead of the U.S. 30-year bond supply and the Federal Reserve's
monetary policy decision on Wednesday, said Tom Simons, money
market economist at Jefferies in New York.
The Fed is widely expected to raise interest rates this week
and is likely to upgrade its U.S. economic forecasts given the
recent spate of upbeat data. Fed funds futures are also pricing
in about a 60 percent implied chance for a March rate increase.
Treasuries rallied earlier after a Bangladeshi man with a
homemade bomb strapped to his body set off an explosion at a New
York commuter hub during rush hour on Monday. The suspect, who
is currently in police custody, had burns and lacerations while
three other people, including a police officer, sustained minor
injuries.
The buying of Treasuries made the U.S. three- and 10-year
notes more expensive going into their auctions, Jefferies'
Simons said.
The Treasury's $24 billion three-year note sale was well
received, with the note fetching a high yield of 1.932 percent,
lower than market expectations of 1.935 percent at the bid
deadline.
The $20-billion U.S. 10-year note, however, was lackluster.
The yield was at 2.384 percent, higher than market expectations
of a yield of 2.380 percent.
U.S. benchmark 10-year Treasury note yields fell
as low as 2.35 percent on safe-haven demand before they retraced
back to 2.386 percent by afternoon trading.
U.S. 30-year bond yields were last at 2.773 percent
, slightly down from 2.775 percent late on Friday.
Three-year note yields rose to 1.940 percent, up
from Friday's 1.915 percent.
The U.S. Treasury will sell $12 billion in 30-year bonds on
Tuesday.
Consumer Price Index data on Wednesday is also a key focus
for the market this week as inflation continues to run below
Federal Reserve forecasts.

Monday, Dec. 11 at 1519 EST (2019 GMT):
Price
US T BONDS MAR8 153 0-4/32
10YR TNotes MAR8 124-60/256 -0-8/256
Price Current Net
Yield Change
(pct) (bps)
Three-month bills 1.2725 1.2941 0.010
Six-month bills 1.4175 1.4473 0.002
Two-year note 99-218/256 1.827 0.028
Three-year note 99-118/256 1.9403 0.025
Five-year note 99-66/256 2.1583 0.013
Seven-year note 98-224/256 2.3006 0.005
10-year note 98-204/256 2.3868 0.004
30-year bond 99-140/256 2.7723 -0.003

DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 18.50 -1.25
spread
U.S. 3-year dollar swap 16.75 -1.25
spread
U.S. 5-year dollar swap 6.25 0.25
spread
U.S. 10-year dollar swap 1.00 0.25
spread
U.S. 30-year dollar swap -20.00 0.50
spread

(Reporting by Gertrude Chavez-Dreyfuss and Karen Brettell;
Editing by James Dalgleish)


First Published: 2017-12-11 16:42:44
Updated 2017-12-11 22:35:11



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