NEW YORK, Oct 26 (Reuters) - U.S. Treasury yields slipped on Thursday after two days of gains in choppy trading, tracking the euro zone bond market, after the European Central Bank extended its stimulus program until at least September next year but at a diminished pace. The ECB said it will cut its bond purchases in half to 30 billion euros a month from January, but hedged its bets by stretching asset buys by nine months given persistently low inflation. "U.S. yields are following global yields lower, fairly sharply as well," said Gennadiy Goldberg, interest rates strategist at TD Securities in New York. "The risk of the ECB being a little more hawkish has led to the rise in yields for the last week or so. So this is a little bit of a spillover effect." A report from Politico saying that current Federal Reserve Chair Janet Yellen is out of the running for the top U.S. central bank job briefly nudged rates higher. But a White House official told Reuters: "No final decision has been made."
The other two contenders for the Fed job are Stanford University economist John Taylor, and current Fed Governor Jerome Powell. Both are viewed as more hawkish than Yellen. In mid-morning trading, 10-year U.S. Treasury note yields were at 2.440 percent, slightly down from Wednesday's 2.444 percent. Ten-year yields hit a seven-month peak on Wednesday. U.S. 30-year bond yields were lower for most of the session, but were last little changed at 2.956 percent, from 2.955 percent the previous session. Thirty-year yields had risen to a five-month high on Wednesday.
October 26 Thursday 10:11AM New York / 1411 GMT Price
US T BONDS DEC7 150-27/32 -0-2/32 10YR TNotes DEC7 124-128/256 0-12/256 Price Current Net Yield % Change
Three-month bills 1.085 1.1031 -0.008 Six-month bills 1.245 1.2702 -0.003 Two-year note 99-204/256 1.603 -0.004 Three-year note 99-176/256 1.7334 -0.003 Five-year note 99-192/256 2.0529 -0.012 Seven-year note 99-8/256 2.2769 -0.005 10-year note 98-92/256 2.439 -0.005 30-year bond 95-240/256 2.9559 0.001
DOLLAR SWAP SPREADS
Last (bps) Net
U.S. 2-year dollar swap 22.50 -0.25
U.S. 3-year dollar swap 22.50 0.00
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 -29.50 -0.25
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrea Ricci)