US TREASURY Lengthy-term yields fall, inflation nonetheless the main focus

    * U.S. 10-year yield breaches 1.7% on Thursday, then slips
    * 5-year breakeven inflation fee rises above 3%

    By Herbert Lash
    NEW YORK, Oct 22 (Reuters) - Yields on longer-dated U.S.
Treasuries edged decrease on Friday after the benchmark 10-year
observe breached 1.7% in a single day, whereas key market gauges of rising
client costs stored urgent increased on considerations about
inflation.
    The yield on 10-year Treasury notes was down 0.5
foundation factors to 1.670% after rising to a five-month excessive of
1.7064% late Thursday. The five-year, U.S. break-even inflation
fee breached 3% in early buying and selling, then slid. 
    The market in a number of weeks, if not sooner, will take a look at the
12 months's excessive hit March 30 of 1.776% on the 10-year Treasury, stated
Tom di Galoma, managing director at Seaport World Holdings.
    "If we get by that, all bets are off we're not going to
see increased charges," di Galoma stated. "Then we'll in all probability see 2%
fairly shortly."
    Charges are rising worldwide on a worldwide provide crunch of
semiconductor chips for the automotive business, di Galoma stated.
The ten-year UK break-even fee hit a 25-year excessive of 4.29%
earlier on Friday, he stated.
    The yield on the 30-year Treasury bond was down
2.1 foundation factors to 2.107%. 
    A intently watched a part of the U.S. Treasury yield curve
measuring the hole between yields on two- and 10-year Treasury
notes, seen as an indicator of financial
expectations, was at 121.3 foundation factors. 
    The 2-year U.S. Treasury yield, which generally
strikes consistent with rate of interest expectations, was up 1.9 foundation
factors at 0.455%. 
    The break-even fee on five-year U.S. Treasury
Inflation-Protected Securities (TIPS) was final at
2.943%, after closing at 2.894% on Thursday, a year-high.
    The ten-year TIPS break-even fee was final at
2.663%, indicating the market sees inflation averaging about
2.7% a 12 months for the subsequent decade.
    The U.S. greenback 5 years ahead inflation-linked swap
, seen by some as a greater gauge of inflation
expectations as a result of potential distortions brought on by the Fed's
quantitative easing, was final at 2.588%.
    
    Oct. 22 Friday 9:28AM New York / 1328 GMT
                               Value        Present   Web
                                            Yield %   Change
                                                      (bps)
 Three-month payments             0.055        0.0558    0.000
 Six-month payments               0.06         0.0609    0.000
 Two-year observe                 99-155/256   0.4554    0.019
 Three-year observe               99-134/256   0.7875    0.016
 5-year observe                98-86/256    1.2237    0.011
 Seven-year observe               98-74/256    1.5109    0.002
 10-year observe                  96-56/256    1.6695    -0.005
 20-year bond                  94-156/256   2.0835    -0.016
 30-year bond                  97-164/256   2.1069    -0.021
                                                      
   DOLLAR SWAP SPREADS                                
                               Final (bps)   Web       
                                            Change    
                                            (bps)     
 U.S. 2-year greenback swap        16.50         0.00    
 unfold                                               
 U.S. 3-year greenback swap        14.75         0.25    
 unfold                                               
 U.S. 5-year greenback swap         7.25         0.25    
 unfold                                               
 U.S. 10-year greenback swap        1.00         0.25    
 unfold                                               
 U.S. 30-year greenback swap      -22.50         0.25    
 unfold (Reporting by Herbert Lash
Modifying by Mark Heinrich)
  

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