NEW YORK, Oct 23 (Reuters) - U.S. Treasury prices rose on Monday in thin volume, tracking gains in the European bond market, as investors added to positions after a sell-off the last few days and ahead of this week's debt auctions and a European Central Bank monetary policy meeting. "Anybody that wanted to sell on the idea that U.S. tax reform was on its way was able to do that last week and get reasonable prices to readjust their positions," said Jim Vogel, interest rates strategist, at FTN Financial in Memphis, Tennessee. "There's really no particular news. Anybody that really wants to nibble or add after the sell-off has to pay progressively higher prices," he added. Euro zone government bond yields also slipped. A big win for Japanese Prime Minister Shinzo Abe's ruling bloc in a national election ensured the continuation of ultra-easy monetary policy in Japan and sets the stage for this week's ECB policy meeting.
Investors expect the ECB to flag a gradual approach in terms of removing monetary accommodation in the euro zone that has kept euro zone bond yields low for some time. Market participants are also focused on this week's shorter-dated Treasury debt auctions. The Treasury is selling $26 billion in 2-year notes on Tuesday, $34 billion in 5-year notes and $15 billion in 2-year floating rate notes on Wednesday, and $28 billion in 7-year notes. Since the September auction cycle, yields have moved higher as interest rate hike expectations for December have increased. This reflects the recent stronger U.S. economic data as well as the Federal Reserve's increased hawkishness about the outlook for interest rates. "We expect to see relatively solid demand...at the auction as Treasuries have cheapened sharply on an outright basis across the curve," said TD Securities in a research note. In late morning trading, 10-year U.S. Treasury note prices were up 3/32, yielding 2.370 percent, down from Friday's 2.381 percent. The 30-year bond prices rose 8/32, with a yield of 2.880 percent, down from 2.894 percent last Friday. U.S. two-year note yields, meanwhile, were at 1.564 percent , also down from 1.576 percent on Friday.
October 23 Monday 10:56AM New York / 1456 GMT Price
US T BONDS DEC7 152-15/32 0-9/32 10YR TNotes DEC7 124-244/256 0-32/256 Price Current Net Yield % Change
Three-month bills 1.09 1.108 0.005 Six-month bills 1.24 1.2649 0.000 Two-year note 99-164/256 1.5642 -0.012 Three-year note 99-202/256 1.6979 -0.019 Five-year note 99-104/256 2.0019 -0.018 Seven-year note 99-108/256 2.2153 -0.015 10-year note 98-248/256 2.3682 -0.013 30-year bond 97-108/256 2.8793 -0.015
DOLLAR SWAP SPREADS
Last (bps) Net
U.S. 2-year dollar swap 23.75 0.00
U.S. 3-year dollar swap 22.50 0.25
U.S. 5-year dollar swap 7.50 0.00
U.S. 10-year dollar swap -2.75 -0.25
U.S. 30-year dollar swap -30.25 0.25
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama)