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TREASURIES-U.S. yields rise as investors look to trade agreement

increases in the shares of top tech companies, including

(Adds analyst comment on bond demand, market activity) BOSTON, Jan 13 (Reuters) - U.S. Treasury yields climbed on Monday as investors shifted their focus from Middle East tensions to the expected signing of a trade deal between the United States and China. The benchmark 10-year yield was up 1.5 basis points in afternoon trading at 1.8423% as investors turned to riskier assets as U.S. corporations start to report fourth-quarter earnings this week. Major U.S. equity market indexes were also up on Monday ahead of the signing of a U.S.-China Phase 1 trade deal expected on Wednesday, a major step toward resolving a dispute that threatened to hammer global growth and has boosted demand for safer assets such as bonds. "The market has found at least a short-term comfort area," said Justin Lederer, a Cantor Fitzgerald Treasury analyst. Protests against Iran's clerical rulers since the weekend underscore that political uncertainties remain in the Middle East. But that drama is focused within Iran, and at least from a global financial standpoint, the tensions are "definitely subsiding, at least for now," Lederer said. Wall Street was trading near record highs on Monday, powered Apple Inc and Facebook Inc. Jonathan Cohn, Credit Suisse interest rate strategist, said bond yields might be expected to climb even higher to attract money out of booming equity markets. But he noted that demand for debt has also stayed strong from investors like pension funds and bond mutual funds. "That's helping temper the rise" in yields, Cohn said. Investors this week will focus on fourth-quarter earnings from major U.S. banks JPMorgan Chase & Co, Morgan Stanley, Goldman Sachs Group Inc and Wells Fargo & Co starting on Tuesday. Analysts expect profits at S&P 500 companies to drop 0.6% in a second straight quarterly decline, according to Refinitiv IBES data, partly due to a strong quarter a year ago and also because of a drag from energy and industrials, which have borne the brunt of the trade war. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 1.2 basis points to 1.5843% in afternoon trading. U.S. Federal Reserve policymakers have forecast an "almost ideal" outcome in 2020, in which the U.S. labor market will stay strong and inflation will approach the central bank's 2% target. But officials should remember to consider potential risks, Boston Federal Reserve Bank President Eric Rosengren cautioned on Monday.

January 13 Monday 2:38PM New York / 1938 GMT Price

Price Current NetYield % Change

(bps)

Three-month bills 1.5175 1.5484 0.010Six-month bills 1.5275 1.5647 0.018Two-year note 100-20/256 1.5843 0.012Three-year note 99-182/256 1.5991 0.013Five-year note 100-124/256 1.6479 0.012Seven-year note 99-236/256 1.7619 0.01710-year note 99-44/256 1.8423 0.01530-year bond 101-148/256 2.3015 0.016

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 5.75 -0.25

spread

U.S. 3-year dollar swap 2.25 0.00

spread

U.S. 5-year dollar swap -0.75 0.00

spread

U.S. 10-year dollar swap -5.50 0.25

spread

U.S. 30-year dollar swap -32.50 0.25

spread

(Reporting by Ross Kerber; Editing by Dan Grebler)