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TREASURIES-U.S. yields climb on stock gains, corporate supply

Richard Leong

* Upbeat bank earnings pare safe-haven bids for U.S. bonds

* Growing U.S. corporate bond supply spurs Treasury sales

* Fed to release Beige Book at 2 p.m. (1900 GMT)

(Updates market action, adds quote) NEW YORK, Jan 16 (Reuters) - U.S. Treasury yields rose on Wednesday as stronger-than-forecast results from two major banks lifted Wall Street to one-month highs, reducing safe-haven demand for U.S. government debt. Rising supply of corporate bonds also pushed Treasury yields higher as dealers were selling Treasuries to lock in interest rates on the debt they underwrote. The $15.6 trillion sector has been trading in a choppy fashion since late 2018 due to volatility in the stock market and bets that the Federal Reserve might take a pause in raising short-term interest rates due to signs of slowing economic growth. Trade tensions between China and the United States, the historically long federal government shutdown and uncertainty over Brexit have also weighed on investor sentiment. "The bond market is being held hostage by stock market moves and Fed speak," said Mary Anne Hurley, vice president of fixed income at D.A. Davidson in Seattle. At 11:05 a.m. (1605 GMT), the yield on benchmark 10-year Treasury notes was up 1.6 basis points at 2.724 percent. It has risen from a near one-year low of 2.543 percent reached 1-1/2 weeks earlier. Two-year yields, which are more sensitive to changes to traders' view on Fed policies, were 1.6 basis points higher at 2.545 percent. Nearly two weeks ago, they touched 2.372 percent, which was the lowest level since May 30. The S&P 500 index and other major U.S. stock indexes rose on Wednesday as Goldman Sachs and Bank of America Corp. reported some better-than-expected results. In recent days, Fed officials including Chairman Jerome Powell have signaled the U.S. central bank is willing to be patient before it raises key policy rates again amid market volatility and uncertainty about the U.S. economy that has been exacerbated by a protracted partial shutdown of the federal government. The Fed will release a snapshot of regional economic activities at 2 p.m. (1900 GMT) with the release of its Beige Book. On the supply front, companies have raised about $10 billion with investment-grade bond issues on Tuesday, bringing the month-to-date issuance to $60 billion, according to IFR.

January 16 Wednesday 11:05AM New York / 1605 GMT Price

US T BONDS MAR9 145-12/32 -1/3210YR TNotes MAR9 121-188/256 -6/32Price Current NetYield % Change

(bps)

Three-month bills 2.3875 2.4354 -0.016Six-month bills 2.45 2.5152 -0.005Two-year note 99-234/256 2.545 0.016Three-year note 99-232/256 2.5327 0.022Five-year note 100-94/256 2.5455 0.022Seven-year note 100-8/256 2.6199 0.02010-year note 103-112/256 2.7236 0.01630-year bond 105-244/256 3.0687 0.000YIELD CURVE Last (bps) Net

Change (bps)

10-year vs 2-year yield 17.70 0.3030-year vs 5-year yield 52.10 -2.05

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 16.75 0.25

spread

U.S. 3-year dollar swap 12.50 0.25

spread

U.S. 5-year dollar swap 9.25 0.25

spread

U.S. 10-year dollar swap 3.00 0.50

spread

U.S. 30-year dollar swap -20.25 0.75

spread

(Reporting by Richard Leong Editing by Frances Kerry)