×

CORRECTED-TREASURIES-Yields dip but still near recent peaks ahead of Fed minutes

minutes@ (Corrects previous session to "Monday" instead of "Tuesday in paragraphs 3 and 7)

* Yields edge lower after weak U.S. factory orders data

* U.S. 3-yr yields touch roughly 3-1/2-month high

* Fed minutes to be released at 2 p.m. EDT

* Traders expect Fed minutes to reinforce hawkish view

NEW YORK, July 5 (Reuters) - Most U.S. Treasury yields edged lower on Wednesday after weak U.S. factory orders data but remained near multi-week or multi-month peaks as traders anticipated minutes from the Federal Reserve's June meeting to reinforce a recent hawkish shift in global central bank policy. The Commerce Department said factory goods orders dropped 0.8 percent in May. Economists had forecast factory orders falling 0.5 percent. U.S. 10-year Treasuries were last up 3/32 in price to yield 2.334 percent, from a yield of 2.346 percent late Monday. Fed officials have signaled they still plan another interest rate hike this year. Analysts said expectations are that the minutes, to be released at 2 p.m. EDT (1800 GMT), will reinforce that view. Analysts said comments from the heads of the European Central Bank and Bank of England last week indicate that global central banks appear to be simultaneously leaning toward tighter monetary policy. This view has driven the recent push higher in yields. "The central banks all seem to be in agreement in kind of a hawkish signaling," said John Herrmann, director of interest rates strategy at MUFG Securities in New York. In morning U.S. trading, benchmark 10-year yields hit their highest in more than seven weeks at 2.357 percent and three-year yields hit a roughly 3-1/2-month high of 1.598 percent. U.S. two-year yields were at 1.410 percent, near Monday's more than eight-year peak of 1.426 percent. Herrmann said the Fed minutes would likely indicate that the central bank saw the recent weakness in inflation as driven by transitory factors related to the oil, pharmaceutical and telecommunications sectors. Analysts also said Friday's U.S. non-farm payrolls report could show a jump in jobs growth for the month of June, which would also pressure yields higher. Economists polled by Reuters expect the report to show U.S. employers added 179,000 jobs last month, compared to just 138,000 in May. "People would lean towards a stronger rather than weaker number," said John Briggs, head of strategy for the Americas at NatWest Markets. "The bias is for strength for a May payback, he said in reference to the June report's potential strength compensating for the weak showing in May.

July 5 Wednesday 11:18AM New York / 1518 GMT Price

US T BONDS SEP7 153-8/32 0-6/32 10YR TNotes SEP7 125-60/256 0-32/256 Price Current Net Yield % Change

(bps)

Three-month bills 1.03 1.047 -0.013 Six-month bills 1.1275 1.1497 -0.002 Two-year note 99-176/256 1.4103 -0.008 Three-year note 99-202/256 1.5735 -0.010 Five-year note 99-50/256 1.9201 -0.010 Seven-year note 98-224/256 2.1745 -0.014 10-year note 100-92/256 2.3338 -0.012 30-year bond 102-212/256 2.8584 -0.004

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 22.75 ******

spread

U.S. 3-year dollar swap 20.25 ******

spread

U.S. 5-year dollar swap 7.00 ******

spread

U.S. 10-year dollar swap -2.25 ******

spread

U.S. 30-year dollar swap -28.75 ******

spread

(Reporting by Sam Forgione; Editing by David Gregorio)