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RPT-TREASURIES-Benchmark U.S. yield again eases from one-year high

Chuck Mikolajczak
·3-min read

(Repeats to additional subscribers) By Chuck Mikolajczak NEW YORK, March 1 (Reuters) - Benchmark U.S. Treasury yields eased for a second consecutive session on Monday after climbing to a one-year high last week as Federal Reserve officials continued to downplay runaway inflation concerns, but a round of solid economic data curbed the decline. Federal Reserve Bank of Richmond Thomas Barkin told the Wall Street Journal that while there is "daylight on the horizon" for the U.S. economy, he does not see inflation rising to problematic levels. "The market is digesting that the Fed is fully aware that inflation will be higher in the short-term; it is not a surprise," said Jim Barnes, director of fixed income at Bryn Mawr Trust in Devon, Pennsylvania. "The fact the market is now back in line with the Fed and the Fed's views, it will limit the volatility we saw from last week." Last week, the yield on the 10-year Treasury note hit a one-year high of 1.614%, sparked by rising expectations of an improving economy, inflation concerns and a weak 7-year auction. Even with the recent pullback, it is still up about 50 basis points on the year. Despite the concerns sparking volatility, Morgan Stanley strategist Vishwanath Tirupattur argued in a note on Sunday that "higher real yields along with rising inflation expectations created an environment where yields are rising for good reasons." The 10-year yield briefly moved higher after a report from the Institute for Supply Management showed manufacturing activity in February was at a three-year high. Commerce Department data showed construction spending for January rose 1.7%, more than double the expected 0.8% increase. Benchmark 10-year notes last rose 10/32 in price to yield 1.4238%, from 1.456% late on Friday. Still, the longer dated 30-year bond last fell 15/32 in price to yield 2.204%, from 2.182% late on Friday, reflecting cautiousness. March 1 Monday 10:51AM New York / 1551 GMT Price US T BONDS JUN1 159-15/32 0-8/32 10YR TNotes JUN1 133-64/256 0-136/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.04 0.0406 0.000 Six-month bills 0.055 0.0558 0.005 Two-year note 99-251/256 0.1348 -0.010 Three-year note 99-142/256 0.2762 -0.032 Five-year note 98-240/256 0.7169 -0.059 Seven-year note 100-24/256 1.111 -0.064 10-year note 97-60/256 1.4238 -0.032 30-year bond 92-208/256 2.204 0.022 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.50 -0.25 spread U.S. 3-year dollar swap 11.75 -0.25 spread U.S. 5-year dollar swap 10.75 2.00 spread U.S. 10-year dollar swap 7.25 1.50 spread U.S. 30-year dollar swap -26.00 2.75 spread (Reporting by Chuck Mikolajczak; Editing by Dan Grebler)