TREASURIES-U.S. bond prices rise on weak data before FOMC
* Soft durable goods data supports view of Fed on hold
* Abe's stimulus plan for Japan raises bets on BOJ action
* U.S (Other OTC: UBGXF - news) . to sell $15 bln in 2-year floating-rate notes
By Richard Leong
NEW YORK, July 27 (Reuters) - A disappointing report on
durable goods orders in June lifted U.S. Treasury prices on
Wednesday as investors awaited possible clues on an interest
rate increase from the Federal Reserve at the conclusion of its
two-day meeting.
A steeper-than-forecast 4 percent drop in demand for
airplanes and other big-ticket items revived worries about the
domestic manufacturing sector and reinforced the notion the
Federal Open Market Committee, the U.S. central bank's
policy-setting group, would leave its target range on interest
rates at 0.25 percent to 0.75 percent.
"The best thing for the Fed is essentially take a pass,"
said Aaron Kohli, interest rate strategist at BMO Capital
Markets in New York.
Interest rates futures implied traders saw about a 48
percent chance the FOMC would raise rates at its December
meeting, compared with 52 percent on Tuesday, CME Group (Kuala Lumpur: 7018.KL - news) 's
FedWatch program showed.
The FOMC is scheduled to release its policy statement at 2
p.m. (1800 GMT).
Another factor underpinning the fall in U.S. yields was
expectations of more stimulus from the Bank of Japan following
Japanese Prime Minister Shinzo Abe's plan for a surprisingly
large $265 billion stimulus package in an effort to boost his
country's sluggish economy.
The two-year Treasury yield, which is sensitive
to traders' views on Fed policy, slipped nearly 1 basis point to
0.754 percent. It (Other OTC: ITGL - news) reached 0.778 percent on Tuesday, its highest
since Britain's vote to leave the European Union on June 23.
Benchmark 10-year Treasury notes were up 4/32 in
price for a yield of 1.547 percent, down 1 basis point from late
on Tuesday, while the 30-year bond was up 14/32 in
price to yield 2.260 percent, down 2 basis points.
On the supply front, the U.S. Treasury Department will sell
$15 billion of two-year floating-rate notes at 11:30 a.m. (1530
GMT), following poor sales of two-year and five-year fixed-rate
debt on Monday and Tuesday.
July 27 Wednesday 10:15AM New York / 1415 GMT
Price
US T BONDS SEP6 172-9/32 0-13/32
10YR TNotes SEP6 132-56/256 0-24/256
Price Current Net
Yield % Change
(bps)
Three-month bills 0.315 0.3196 -0.002
Six-month bills 0.4175 0.4242 0.002
Two-year note 100 0.75 -0.012
Three-year note 99-178/256 0.8543 -0.011
Five-year note 99-238/256 1.1395 -0.015
Seven-year note 99-244/256 1.3821 -0.012
10-year note 100-172/256 1.5507 -0.010
30-year bond 105-20/256 2.2647 -0.015
DOLLAR SWAP SPREADS
Last (bps) Net (LSE: 0LN0.L - news)
Change
(bps)
U.S. 2-year dollar swap 22.25 0.50
spread
U.S. 3-year dollar swap 18.50 0.75
spread
U.S. 5-year dollar swap 2.25 -1.00
spread
U.S. 10-year dollar swap -10.00 0.00
spread
U.S. 30-year dollar swap -43.75 0.00
spread
(Reporting by Richard Leong; Editing by Dan Grebler)