* BOJ may consider exit strategy if inflation goal isreached* Bond yields pressured by expected huge corporate bondsupply* Safe-haven bond holdings pared in wake of Trump's tariffplan* Traders eye weekend elections in Germany, Italy (Updates market action, adds quote)By Richard LeongNEW YORK, March 2 (Reuters) - U.S. Treasury yields rose onFriday, with the 10-year yield bouncing back from a three-weeklow as the Bank of Japan's chief hinted at a possible exit fromits ultra-easy policies if inflation hits its target in itsfiscal 2019.The bond market also came under pressure as investorsprepared a massive flood of corporate bond issuance next week,led by a $40 billion deal from drugstore chain CVS ,according to IFR, a Thomson Reuters unit. The yield rise reversed the prior day's fall tied to asafe-haven bond market rally in reaction to President DonaldTrump's plan for stiff tariffs on steel and aluminum, whichraised fears of a trade war and surging costs for consumers. "Markets don't want trade wars. The markets are pricing inthat risk," said Boris Rjavinski, senior rate strategist atWells Fargo Securities in New York. "The news from Japan alsoplayed a role."If the BOJ were to move away from its crisis-mode measures,it would follow in the footsteps of the U.S. Federal Reserve andother major central banks.
"The BOJ's board members expect that prices will reach 2percent around fiscal 2019. If this happens, there's no doubtthat we will consider and debate an exit," Bank of JapanGovernor Haruhiko Kuroda told parliament. The benchmark 10-year Treasury yield was 2.853percent, up 5.1 basis points from late on Thursday. It touched athree-week low of 2.793 percent earlier on Friday.The two-year yield hit a two-week low of 2.197percent before moving to 2.234 percent, up 2.8 basis points fromThursday, according to Reuters data.The spread between five-year and 30-year yields was 50.6 basis points, wider than the 50.2 basispoints late on Thursday, Tradeweb data showed.Bond yields had fallen late Thursday through overnighttrading on jitters about rising trade tension from Trump'stariffs on imported steel and aluminum before the BOJ newsreversed their drop. Some analysts said it is unclear whetherthe tariff would ignite an all-out trade war."The tariff is all intent purpose just a headline. There'sis even some push-back against it here in the U.S.," said JasonCelente, senior portfolio manager at Insight Investment in NewYork. Meanwhile, traders await the outcomes of elections inGermany and Italy on Sunday.Pollsters forecast a hung parliament in Italy, with theanti-establishment 5-Star Movement to be the biggest singleparty. In Germany, Chancellor Angela Merkel's rulingconservative party faces stiff resistance from the SocialDemocrats to be part of an alliance.Election results that produce weak governing bodies or oneswith anti-EU bias may spur safe-haven demand for Treasuries,analysts said.March 2 Friday 2:34PM New York / 1934 GMT Price US T BONDS JUN8 143-18/32-25/32 10YR TNotes JUN8 120-64/256 -12/32
PriceCurrent NetYield % Change(bps) Three-month bills 1.6125 1.64130.012 Six-month bills 1.8025 1.844 0.005 Two-year note 100-8/2562.23370.028 Three-year note 99-158/256 2.38490.033 Five-year note 100-10/256 2.61650.043 Seven-year note 99-212/256 2.77720.048 10-year note 99-36/2562.84970.048 30-year bond 97-156/256 3.12340.037 YIELD CURVE Last (bps) Net
Change
(bps)10-year vs 2-year yield 61.402.00 30-year vs 5-year yield 50.600.45 DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)U.S. 2-year dollar swap25.25-0.75 spreadU.S. 3-year dollar swap21.75-0.50 spreadU.S. 5-year dollar swap 9.50-0.25 spreadU.S. 10-year dollar swap0.75 0.00 spreadU.S. 30-year dollar swap-18.50 0.50 spread
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Top U.S. trade partners & foreign holders of Treasuries U.S. bond sector total returns in February EXCLUSIVE-Pimco economist Clarida seen as front-runner for Feddeputy job -sources ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Richard Leong; Editing by Jonathan Oatis and TomBrown)
Messaging: richard.leong.thomsonreuters.com@thomsonreuters.net;Twitter @RichardLeong2)) Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.