TREASURIES-U.S. debt yields rise for third straight week

* Yields rise for third consecutive week

* Prices cut before auctions of 3s, 10s and 30s next week

* Investors have wary eye on federal budget talks
(Adds comment, updates prices, changes byline)

By Ellen Freilich

NEW YORK, April 8 (Reuters) – U.S. Treasuries yields rose
on Friday, leaving bonds with a third straight week of losses,
the legacy of investors’ willingness to acquire riskier assets
for a greater rate of return.

A potentially imminent government shutdown was also on
investors’ minds as traders trimmed prices to make room for $66
billion in new three-, 10- and 30-year Treasury notes next

The notes and bonds are set to be auctioned even if many
government offices are shut and their workers furloughed.

Graphic –

While clouds of uncertainty periodically intervene to send
investors back to the shelter of safe-haven U.S. government
debt, yields have generally headed higher as riskier asset
classes have lured investors away from Treasuries, said Robert
Tipp, chief investment strategist for Prudential Fixed Income,
with $240 billion in assets under management.

Those riskier assets like stocks and commodities have
benefited from the Federal Reserve keeping its foot on the
monetary accelerator, as well as various forms of fiscal
stimulus, including the latest payroll tax holiday, he said.

Benchmark 10-year note yields brushed up against support at
3.59 percent during the session, but eased from that level in
late trade, to 3.58 percent.

U.S. yields followed in the path of German bunds, whose
yields rose as investors assumed the European Central Bank
would continue to raise interest rates after hiking them on
Thursday for the first time since 2008, said FTN Financial
interest rate strategist Jim Vogel, in Memphis, Tennessee.

“Commentators see yesterday’s quarter point as the first
step in a series of tightenings, regardless of what bank
officials say,” he said.

Investors also kept an eye on budget negotiations in
Washington, where failure to reach an agreement by midnight
would shut down the federal government.

Analysts at JPMorgan said foreign investors became sellers
of Treasuries when the government shut down in 1995.

The recent backup in yields, however, could help new sales
of longer-dated debt next week, which would take place even
under a federal government shutdown.

“I don’t anticipate any large problems getting supply done
next week,” said Alan De Rose, head trader in government
trading and finance at Oppenheimer and Co in New York. “The
fact that yields have backed up will help in that regard.”

Two-year notes (US2YT=RR: Quote, Profile, Research) fell 2/32 in price on Friday to
yield 0.82 percent, up from 0.79 percent late on Thursday.

Five-year notes (US5YT=RR: Quote, Profile, Research) fell 5/32 in price to yield 2.32
percent, up from 2.28 percent on Thursday. They traded as high
as 2.42 percent on Feb. 9.

Ten-year notes (US10YT=RR: Quote, Profile, Research) fell 09/32 in price to yield
3.59 percent, up from 3.55 percent on Thursday. They traded at
3.77 percent on Feb. 9 and as low as 3.15 percent on March 16.

Thirty-year bonds (US30YT=RR: Quote, Profile, Research) fell 15/32 in price to yield
4.65 percent, up from 4.62 percent on Thursday. They have
ranged from 4.71 percent on Feb. 9 to a recent low of 4.32
percent on March 16.
(Additional reporting by Karen Brettell; Editing by Dan

TREASURIES-U.S. debt yields rise for third straight week