TREASURIES-U.S. yields up as risk appetite rises, investors await supply

NEW YORK, March 11 (Reuters) - U.S. Treasury yields rose on Monday after falling for four straight sessions as overall risk appetite improved and equity markets generally stabilized, with investors bracing for this week's slate of corporate supply and government debt auctions. "This is a little bit of a pullback from Friday," said Gennadiy Goldberg, interest rates strategist at TD Securities in New York. "Risk is a little bit better and that's putting a bit of pressure on Treasuries." U.S. government debt and corporate supply is also a big factor this week, analysts said, with $78 billion in Treasury auctions scheduled. The Treasury is set to auction $38 billion in three-year notes later on Monday, $24 billion in 10-year notes on Tuesday, and $16 billion in 30-year bonds on Wednesday. Investors typically sell Treasuries ahead of an auction to push the yield higher so they can buy them at a lower price. On the corporate debt side, four U.S. investment grade deals were announced on Monday, led by BB&T Bank, natural gas company ONEOK, diversified holding company RELX Capital and Dominion Energy. Ahead of corporate supply, bond managers tend to hedge against large interest rate moves by selling U.S. government debt. "Supply may be putting pressure on Treasuries as well," TD's Goldberg said. "We're seeing the curve steepen a bit and that may be on the back of corporate supply, or on the back of the U.S. 10-year to 30-year issuance we'll see later this week." In late morning trading, U.S. 10-year note yields rose to 2.639 percent, up from 2.625 percent late on Friday. U.S. 30-year bond yields were also up at 3.031 percent , from 3.009 percent on Friday. On the short end of the curve, U.S. 2-year yields climbed as well to 2.471 percent, compared with Friday's 2.463 percent

Ahead of Monday's auction, U.S. three-year notes were at 2.446 percent, up from 2.433 percent on Friday. Data showing U.S. retail sales unexpectedly rising 0.2 percent in January had little impact on Treasuries, as it was offset by a downward revision in December sales to show a 1.6 percent drop instead of the previously reported 1.2 percent fall. The December drop was the biggest since September 2009, when the economy was emerging from recession. Following a weak U.S. non-farm payrolls report on Friday, the retail sales data reinforced expectations the Federal Reserve will not raise interest rates at all this year, said Andrew Hunter, senior U.S. economist at Capital Economics in London. "With the fiscal boost fading and the Fed's prior tightening becoming a more serious drag, we continue to think the Fed's next move will be to start cutting rates in early 2020," Hunter added.

March 11 Monday 10:50AM New York / 1450 GMT

Price Current Net Yield % Change

(bps)

Three-month bills 2.395 2.4422 -0.012 Six-month bills 2.45 2.5212 -0.003 Two-year note 100-13/256 2.4731 0.010 Three-year note 100-38/256 2.4469 0.014 Five-year note 99-178/256 2.4404 0.015 Seven-year note 99-204/256 2.5319 0.015 10-year note 99-216/256 2.6429 0.018 30-year bond 99-92/256 3.0326 0.024

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 12.75 1.00

spread

U.S. 3-year dollar swap 9.25 0.75

spread

U.S. 5-year dollar swap 7.75 0.50

spread

U.S. 10-year dollar swap 2.00 0.25

spread

U.S. 30-year dollar swap -19.75 0.50

spread

(Reporting by Gertrude Chavez-Dreyfuss Editing by Paul Simao)