TREASURIES-Long-dated yields slide to one-month low on Trump worries

By Gertrude Chavez-Dreyfuss

NEW YORK, March 27 (Reuters) - U.S. long-dated Treasury

yields fell to one-month lows on Monday, weighed down by growing

uncertainty about whether the Trump administration could deliver

on its campaign promise to bolster the economy.

Trump suffered a major political setback last Friday when

fellow Republicans pulled their healthcare plan after years of

promising to abolish former President Barack Obama's 2010 health

law.

Yields, which move inversely to prices, had soared following

Donald Trump's election as President last November on the

expectation of more stimulus measures that could push inflation

higher and prompt the Federal Reserve to raise interest rates at

a faster pace.

But since the Fed raised rates a few weeks ago and stuck to

its pace of three rate hikes this year, yields have fallen. U.S.

10-year note yields have declined by a quarter of a percentage

point, while that of U.S. 30-year bonds have dropped 20 basis

points.

"This is just follow-through from Friday. There is

disappointment over the inability to pass the reform of

Obamacare," said Gennadiy Goldberg, interest rates strategist at

TD Securities in New York.

"There was also some concern over the time line over the tax

reform," he added.

Investors feared that the healthcare bill's defeat augured

badly for tax reform.

House Ways and Means Committee Chairman Kevin Brady said his

committee had been working on tax reform in parallel with the

failed healthcare reform push. Brady (LSE: BRY.L - news) said the committee plans to

move on the tax bill in the spring.

In mid-morning trading, benchmark 10-year

notes gained 11/32 in price to yield 2.362 percent,

down from 2.4 percent on Friday. Yields fell as low as 2.348

percent, their weakest level in one month. They were down from a

three-month high of 2.63 percent on March 14.

U.S. 30-year bond prices rose 15/32 , yielding

2.976 percent. Earlier, yields slid to 2.96 percent, their

lowest since Feb. 28.

The Treasury Department will sell $88 billion in new

two-year, five-year and seven-year notes this week.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu

Nomiyama)