REFILE-TREASURIES-Yields inch up slightly after First Republic asset sale

(Repeats to additional subscribers) By Matt Tracy WASHINGTON, May 1 (Reuters) - U.S. Treasury yields opened higher on Monday after JPMorgan announced that it would buy most of First Republic Bank's assets after regulators seized the troubled lender. The two-year Treasury yield , which typically moves in step with interest rate expectations, rose 4.1 basis points to 4.105%. The yield on 10-year Treasury notes was up 2.6 basis points to 3.478%, while the yield on 30-year notes was up 4.6 basis points to 3.723%. Ten-year yields have seen little in the way of significant shifts over the last several weeks, as the market has priced in a 25-basis point hike to come out of the U.S. Federal Reserve's next Federal Open Markets Committee meeting on Wednesday. Monday morning's upward tick in yields comes after news that the government had seized First Republic's assets, most of which were in turn acquired by JPMorgan. "What I would observe is that the short-term fluctuations are probably driven more by news around First Republic," said Eric Winograd, senior U.S. economist at money manager AllianceBernstein. The latest in the banking sector's turmoil, First Republic's demise is likely to lead banks and other lenders to further tighten their credit standards, according to Winograd. "That will do some of the Fed's work for them, and so it mitigates the need for additional rate hikes," Winograd said. The gap between two- and 10-year Treasury yields - a closely watched indicator of economic expectations - was last at negative 62.8 basis points. GDP figures last week showed slower economic growth than expected, while the personal consumption expenditure index rose from the previous quarter. Several key economic indicators will be released this week, which will help show the Fed how much more work it needs to do in curbing persistent inflation. On Monday, ISM manufacturing data, construction spending and S&P Global manufacturing purchasing managers' index data are due. Nonfarm payrolls figures, also a key datapoint for the Fed, are due on Friday.

May 1 Monday 10:21AM New York / 1421 GMT Price Current Net Yield % Change (bps) Three-month bills 4.965 5.0944 -0.010 Six-month bills 4.905 5.11 0.058 Two-year note 99-130/256 4.1345 0.070 Three-year note 99-190/256 3.8426 0.065 Five-year note 99-148/256 3.593 0.055 Seven-year note 99-156/256 3.5636 0.059 10-year note 99-208/256 3.5224 0.070 20-year bond 99-224/256 3.8838 0.077 30-year bond 97-104/256 3.7704 0.093
DOLLAR SWAP SPREADS

Last (bps) Net

Change

(bps)
U.S. 2-year dollar swap 28.50 0.25
spread
U.S. 3-year dollar swap 17.50 0.25
spread
U.S. 5-year dollar swap 9.25 0.75
spread
U.S. 10-year dollar swap 2.00 1.25
spread
U.S. 30-year dollar swap -41.25 0.25
spread

(Reporting by Matt Tracy; Editing by Will Dunham)

Reuters

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REFILE-TREASURIES-Yields inch up slightly after First Republic asset sale

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