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TREASURIES-U.S. bond yields climb before 30-year bond sale

* U.S. to sell $15 bln in 30-year bonds, final refunding leg

* Investors await Senate bill on U.S. tax overhaul

* U.S. yield curve steepens from flattest level in a decade

(Updates market action, adds quote) NEW YORK, Nov 9 (Reuters) - U.S. Treasury yields rose on Thursday, with 10-year yields bouncing from near three-week lows, as traders prepared for $15 billion worth of 30-year bonds, the last part of this week's $64 billion November refunding. The yield curve steepened a tad from its flattest level in a decade as traders await the U.S. Senate version of a proposal to rewrite the federal tax code, which might add significantly to future government borrowing to finance possibly steep tax cuts. The Republican-backed bill from the Senate is expected to be released later on Thursday, while the 30-year bond auction is scheduled for 1 p.m. (1800 GMT). "For the auction we believe many will await their set-ups until after details from Washington on taxes are released," Cantor Fitzgerald Treasury strategist Justin Lederer wrote in a research note. At 10 a.m. (1500 GMT), the 10-year Treasury note yield traded at 2.331 percent, up 1 basis point from late on Wednesday when it hit a near three-week trough of 2.304 percent. The 30-year bond yield rose 1.6 basis points to 2.800 percent, not far from a near six-week low of 2.765 percent set on Tuesday. The two-year yield was unchanged at 1.645 percent. The yield spread between two-year and 10-year Treasuries hit a fresh decade-tight level of 65.9 basis points earlier on Thursday, before steepening to 68.0 basis points, Reuters data showed. Traders have favored longer-dated Treasuries over shorter-dated issues over the past couple of weeks, as they anticipate further rate increases from the Federal Reserve and domestic inflation remaining below the Fed's 2 percent goal, analysts said. Uncertainty about whether Republicans in Congress will pass tax cuts and other changes to the U.S. tax code, and a diminished likelihood that the government will introduce a Treasury bond that matures beyond 30 years have made such "curve-flattener" trades more appealing, they said. "What had lifted yields earlier had faded," said Stephen Gallagher, head of U.S. research at Societe Generale in New York. November 9 Thursday 10:08AM New York / 1508 GMT Price

US T BONDS DEC7 153-28/32 -0-15/32 10YR TNotes DEC7 125-40/256 -0-24/25

6

Price Current Net Yield % Change

(bps)

Three-month bills 1.23 1.2509 0.026 Six-month bills 1.33 1.3575 0.015 Two-year note 99-182/256 1.6495 0.005 Three-year note 99-242/256 1.7688 0.006 Five-year note 99-240/256 2.0132 0.011 Seven-year note 100-76/256 2.2038 0.015 10-year note 99-64/256 2.3345 0.018 30-year bond 98-212/256 2.8082 0.024 YIELD CURVE Last (bps) Net

Change (bps)

10-year vs 2-year yield 68.40 -0.10 30-year vs 5-year yield 79.40 1.45

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 19.75 0.25

spread

U.S. 3-year dollar swap 18.00 0.50

spread

U.S. 5-year dollar swap 6.75 0.25

spread

U.S. 10-year dollar swap -2.00 1.00

spread

U.S. 30-year dollar swap -26.50 0.00

spread

(Reporting by Richard Leong, Editing by Rosalba O'Brien)