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TREASURIES-U.S. yields little changed ahead of ECB meeting

* Traders speculate on timing of ECB bond tapering

* Corporate bond supply counters fading view on fiscal stimulus

* U.S. housing starts rebound more than expected in June

NEW YORK, July 19 (Reuters) - U.S. Treasury yields were little changed on Wednesday on light trading volume with benchmark yields hitting their lowest levels in nearly three weeks in advance of a meeting of European Central Bank policymakers on Thursday. Traders have been speculating on the timing when the ECB would reduce its bond purchase program as ECB President Mario Draghi highlighted the euro zone's recovery in late June. This has spurred selling of European government debt, propelling the 10-year German yield to an 18-month high. The rise in Treasury yields earlier this month stemmed partly from the increase in their European counterparts, analysts and traders said. "We are in a bit of a holding pattern before the ECB meeting. It could be a catalyst if they are more hawkish than expected. It could indirectly affect U.S. yields but it won't be a one-for-one move," said Mike Lorizio, head of Treasuries trading at Manulife Asset Management in Boston. At 10:14 a.m. (1414 GMT), benchmark 10-year Treasury yield was 2.264 percent, flat from Tuesday's close, after touching 2.255 percent earlier on Wednesday, which was the lowest since June 29, according to Reuters data. German 10-year yield was down 2 basis points at 0.538 percent. The ECB is expected to wait until September before possibly announcing a tapering of its bond purchases, a Reuters poll released on July 14 showed. The Bank of Japan began a two-day policy meeting that will end on Thursday. Analysts polled by Reuters did not anticipate a shift in policy at the meeting. Meanwhile, U.S. yields stabilized following Tuesday's drop in reaction to the Senate's failure for overhaul or repeal Obamacare. This was seen as a setback to President Donald Trump and his Republican Party, casting a cloud on whether they could implement their economic agenda, which was viewed as promoting business spending and faster economic growth. "Any hope for significant fiscal stimulus for the U.S. economy seems to be fully priced out," Lorizio said. Countering the faded view on fiscal stimulus was a healthy supply of higher-yielding corporate bonds. Companies have raised $30.35 billion from issuing investment-grade bonds so far this week, according to IFR, a Thomson Reuters unit. On the data front, U.S. home construction grew 8.3 percent to a seasonally adjusted rate of 1.22 million units, the Commerce Department said, which was stronger than what analysts had expected. July 19 Wednesday 10:15AM New York / 1415 GMT Price

US T BONDS SEP7 153-27/32 0 10YR TNotes SEP7 126-16/256 -0-12/25

6

Price Current Net Yield % Change

(bps)

Three-month bills 1.1 1.1184 0.048 Six-month bills 1.1 1.1215 0.011 Two-year note 99-204/256 1.356 0.004 Three-year note 99-240/256 1.5215 0.000 Five-year note 99-170/256 1.8213 0.003 Seven-year note 99-128/256 2.0776 0.005 10-year note 100-240/256 2.2678 0.005 30-year bond 102-240/256 2.8529 0.002

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 23.25 0.50

spread

S U.S. 3-year dollar swap 18.50 1.25

spread

U.S. 5-year dollar swap 7.25 1.00

spread

U.S. 10-year dollar swap -5.00 1.00

spread

U.S. 30-year dollar swap -33.50 1.50

spread

(Reporting by Richard Leong; Editing by Chizu Nomiyama and Jonathan Oatis)