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TREASURIES-Yields rise as Syria concerns ease after Trump comments

NEW YORK, April 12 (Reuters) - U.S. Treasury yields climbed on Thursday as risk appetite improved and geopolitical tensions eased after President Donald Trump said a possible attack on Syria may not be imminent, contrary to what he signaled on Wednesday. Over the last couple of sessions, the U.S. bond market has traded off political and international headlines, temporarily superseding economic data. Even though the overall trend for yields, which move inversely to prices, remained higher, the movements have been much more narrow and contained. Referring to his threatened strike on Syria in response to a suspected poison gas attack on a rebel enclave, Trump tweeted on Thursday, "Never said when an attack on Syria would take place. Could be very soon or not so soon at all!" His comment pushed benchmark U.S. 10-year note yields to a one-week high, after a lackluster auction of the security on Wednesday. "There is less immediate concern about military strikes or action in Syria," Jim Vogel, interest rates strategist, at FTN Financial in Memphis, Tennessee, said. "It doesn't move it to the back-burner, but it allows you to look around and trade other things and that gives room for rates to rise just a little bit from their sort of cramped or compressed levels," he added. Yields were also boosted by data showing U.S. initial jobless claims dropped 9,000 to a seasonally adjusted 233,000 for the week ended April 7, reflecting continued improvement in the labor market. Economists polled by Reuters had forecast claims falling to 230,000 in the latest week. In morning trading, the U.S. 10-year yields rose to 2.821 percent, from 2.79 percent late on Wednesday. U.S. 30-year yields climbed to 3.036 percent, from Wednesday's 3.005 percent. On the front end of the curve, U.S. 2-year yields were up at 2.343 percent, compared with 2.311 percent on Wednesday. Later in the session, the U.S. Treasury will auction $13 billion in reopened 30-year bonds, a day after the 10-year note sale drew its lowest demand in nearly 1-1/2 years from so-called "indirect bidders," which include fund managers and foreign central banks. "Today's 30-year auction offers less risk for bond investors provided it clears the market below 3.04 percent," FTN's Vogel said.

April 12 Thursday 10:01AM New York / 1401 GMT Price

US T BONDS JUN8 145-15/32 -0-21/32 10YR TNotes JUN8 120-152/256 -0-64/25

6

Price Current Net Yield % Change

(bps)

Three-month bills 1.705 1.7361 0.002 Six-month bills 1.8975 1.9424 0.012 Two-year note 99-212/256 2.3398 0.029 Three-year note 99-180/256 2.4784 0.027 Five-year note 99-76/256 2.652 0.032 Seven-year note 99-32/256 2.7639 0.033 10-year note 99-100/256 2.8211 0.031 30-year bond 99-88/256 3.0335 0.028

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 31.50 0.25

spread

U.S. 3-year dollar swap 25.50 0.25

spread

U.S. 5-year dollar swap 13.75 0.25

spread

U.S. 10-year dollar swap 3.50 0.00

spread

U.S. 30-year dollar swap -13.50 -0.50

spread

(Reporting by Gertrude Chavez-Dreyfuss Editing by Frances Kerry)