TREASURIES-Traders pause sell-off on lower consumer sentiment

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 (Updates with market activity, adds detail on yield curve)
    By Ross Kerber and Dhara Ranasinghe
    NEW YORK / LONDON, Nov 12 (Businesshala) - Selling in U.S.
Treasury markets paused on Friday as data showed  consumer
sentiment plunged to a 10-year low on inflation worries, leaving
traders trying to gauge the pace of future central bank interest
rate increases. 
    The yield on the U.S. five-year note was up 1.8
basis points at 1.2309%, after earlier in the day reaching
1.263%, the highest since February 2020 and up five
basis points from its close on Wednesday, the last trading day
before bond markets were closed on Thursday.
    The note and others fell back as the University of
Michigan's consumer sentiment index showed little belief that
policymakers are taking sufficient steps to tame inflation.

    The moves still left key parts of the U.S. yield curve close
to milestone lows. For instance the spread between five-year and
30-year Treasuries was at 71 basis points, about a basis point
higher than its close on Wednesday. It had reached as low as 62
basis points earlier Friday, its lowest since March 2020.  
    Kim Rupert, senior economist for Action Economics, said the
trading showed investors struggling to forecast whether the U.S.
Federal Reserve will accelerate its pace of expected rate hikes
in the face of the Michigan data and other indications of price
increases.
    Economic data on Wednesday showed the biggest annual rise in
U.S. inflation in 31 years, for instance, sending yields higher.
 
    "The market is now pricing in a more aggressive Fed
tightening structure," she said. But traders' mood seemed
jittery. "There's a lot of mixed messages and mixed positioning
at this point," Rupert said  
    U.S. stock indexes rose on Friday, as Johnson & Johnson and
big technology and communication stocks led gains, contributing
to risk-on sentiment.
    The benchmark 10-year note was up 1.2 basis
points at 1.5699% on Friday. The 10-year breakeven rate
 held near 2.71%, the highest since May 2006.    
    
    
      November 12 Friday 12:10PM New York / 1710 GMT
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.0525       0.0532    0.002
 Six-month bills               0.065        0.0659    0.000
 Two-year note                 99-185/256   0.5175    0.014
 Three-year note               99-178/256   0.8531    0.018
 Five-year note                99-126/256   1.2309    0.018
 Seven-year note               99-108/256   1.4627    0.016
 10-year note                  98-52/256    1.5699    0.012
 20-year bond                  96-88/256    1.9744    0.012
 30-year bond                  98-140/256   1.9391    0.021
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        24.00         2.25    
 spread                                               
 U.S. 3-year dollar swap        20.00         2.25    
 spread                                               
 U.S. 5-year dollar swap         9.00         0.75    
 spread                                               
 U.S. 10-year dollar swap        4.25         1.25    
 spread                                               
 U.S. 30-year dollar swap      -18.25         0.50    
 spread (Reporting by Ross Kerber and Dhara Ranasinghe
Editing by Mark Potter and Jonathan Oatis)
  
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