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TREASURIES-U.S. yields rise as fiscal plan gains Trump's support

* Benchmark 10-year yields rise from near 10-month low

* October Treasury bill rates tumble but Dec T-bill rates rise

* Fed's Beige Book shows growth pickup, muted inflation

* Fed Vice Chair Fischer resigns, to leave in October

(Updates market action, adds quote) NEW YORK, Sept 6 (Reuters) - U.S. Treasury yields rose on Wednesday as a congressional fiscal plan that includes a three-month suspension of the debt ceiling gained support from President Donald Trump, reducing safe-haven demand among investors worried about a short-term default. The proposal from top Congressional Democrats also seeks to fund the government to avert a shutdown as well as programs aimed to help those affected by Hurricane Harvey. "That took pressure off the rates market, but we could see a replay in December," said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott in Philadelphia. Investors have been concerned that a potential block on the Treasury's ability to sell more debt could result in a partial government shutdown, or even a default that could roil financial markets. Investors had dumped Treasury bills that mature in October on worries the government would delay repaying them if the debt ceiling were not increased in time. Interest rates on Treasury bills due in October tumbled on news of a short-term increase in the federal borrowing limit, currently at $19.9 trillion, but those on T-bills due in December jumped. Interest rates on T-bills due on Oct. 5 fell over 20 basis points to 1.0425 percent, its lowest since Thursday. T-bill rates on other October issues fell anywhere from 2 basis points to 26 basis points, Reuters data showed. The Treasuries market sell-off was underpinned by the Federal Reserve's Beige Book which showed a pickup in business activity but inflation remained subdued in July through mid-August prior to Harvey. Another day of heavy corporate bond supply also curbed investor demand on lower-yielding Treasuries. The rise in longer-dated Treasury yields was limited by jitters about further nuclear weapon tests by North Korea and concerns about Hurricane Irma, a powerful storm heading toward the southern United States. The 10-year Treasury yield fell to 2.054 percent earlier Wednesday, the lowest since Nov. 10, before rising to 2.103 percent in late trading. Separately, Fed Vice Chair Stanley Fischer, said on Wednesday he would step down from his position on or around Oct. 13 for personal reasons, before his term expires next year.

The absence of Fischer, who is seen to espouse a centrist view on monetary policy, will unlikely change the Fed's gradual interest rate-hike path and its possible announcement of a plan to shrink its $4.5 trillion balance sheet in September, analysts said. September 6 Wednesday 2:58PM New York / 1858 GMT Price

US T BONDS DEC7 156-11/32 -0-21/32 10YR TNotes DEC7 127-24/256 -0-84/25

6

Price Current Net Yield % Change

(bps)

Three-month bills 1.0475 1.0649 0.026 Six-month bills 1.1425 1.1651 0.023 Two-year note 99-228/256 1.3061 0.016 Three-year note 100-62/256 1.4154 0.024 Five-year note 99-182/256 1.6857 0.038 Seven-year note 99-152/256 1.9375 0.041 10-year note 101-72/256 2.1064 0.036 30-year bond 100-144/256 2.7224 0.033

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 22.50 0.75

spread

U.S. 3-year dollar swap 19.75 0.75

spread

U.S. 5-year dollar swap 7.00 0.25

spread

U.S. 10-year dollar swap -4.75 0.50

spread

U.S. 30-year dollar swap -34.50 1.00

spread

(Reporting by Richard Leong; Editing by Frances Kerry and Richard Chang)