TREASURIES-Longer-dated yields rise before supply

By Karen Brettell

NEW YORK, Jan 6 (Reuters) - Longer-dated Treasury yields rose on Monday and 30-year yields hit a 14-month high before the Treasury this week will sell $119 billion in coupon-bearing supply and as traders weighed the impact policies enacted by the incoming Donald Trump administration will have on the economy.

The Treasury will sell $58 billion in three-year notes on Monday, $39 billion in 10-year notes on Tuesday and $22 billion in 30-year bonds on Wednesday.

“Momentum is probably for lower prices and higher yields initially, just because there's not a lot of people that are set up” for the auctions, said Tom di Galoma, head of fixed income trading at Curvature Securities.

Yields briefly declined after a news report indicated that planned tariffs under Trump will be less aggressive than previously feared.

Trump's aides are exploring tariff plans that would be applied to every country but only cover certain sectors deemed critical to national or economic security, the Washington Post reported on Monday.

Trump is expected to cut taxes and business regulations, which analysts say should boost growth. Other policies including a clampdown on illegal immigration and tariffs, however, are expected to add to inflation, which could weigh on the economy longer-term.

Concerns over the fiscal trajectory are also leading longer-term U.S. Treasury yields higher.

“A lot of that is coming from an impression that the new Treasury Secretary will be funding the Treasury with more focus on longer-dated stuff rather than shorter-dated stuff because Janet Yellen, Secretary of the Treasury, has been really focused on bringing more T-bills and more front-end paper,” said di Galoma.

Interest rate sensitive two-year note yields US2YT=RR were last up 1 basis point on the day at 4.289%.

Benchmark 10-year yields US10YT=RR rose 3.3 basis points to 4.628%. They reached 4.641% on Dec. 26, the highest since May 2.

Thirty-year yields US30YT=RR increased 2.6 basis points to 4.8409%. They reached 4.849% earlier on Monday, the highest since November 2023.

Economic releases this week will include Friday’s jobs report for December, which is expected to show that employers added 154,000 jobs during the month. USNFAR=ECI

(Reporting by Karen Brettell
Editing by Mark Potter)

((karen.brettell@thomsonreuters.com;))