TREASURIES-Yields tumble on Russia explosion, 2nd-qtr allocation shift
* Deadly Russia subway explosion triggers risk-off move * Reallocation into Treasuries to start 2nd quarter garners demand * Lack of confidence in "Trump trade" boosts Treasuries By Sam Forgione NEW YORK, April 3 U.S. Treasury yields fell on Monday, with benchmark 10-year yields touching more than one-month lows after a deadly explosion in a metro tunnel in Russia and reallocation into U.S. government debt at the start of the quarter boosted demand. Yields on 10-year U.S. Treasury notes touched 2.332 percent, their lowest since Feb. 27, after at least nine people were killed and 20 were injured when an explosion tore through a train carriage in a St. Petersburg metro tunnel. Interfax news agency said the blast may have been caused by an explosive device hidden in a briefcase. "With everything surrounding all the intrigue, real or discussed between the U.S. administration and Russian officials, the subway bombing in St. Petersburg sort of creates a new sensitivity in the U.S. market as well," said Jim Vogel, interest rates strategist at FTN Financial in Memphis. Analysts also said investors' performance was reset for the second quarter, giving them an opportunity to either reduce short positions in Treasuries or sell stocks and reallocate into U.S. debt. The benchmark U.S. S&P 500 stock index was last down 0.6 percent. They said factors such as a less hawkish than expected Federal Reserve and reduced confidence in fiscal stimulus from U.S. President Donald Trump's administration motivated investors to shift into Treasuries. New York and other states challenged the Trump administration on Monday for illegally blocking energy efficiency standards, casting further doubt on the new government's ability to push through planned reforms. Yields on three- and five-year Treasuries hit their lowest since Feb. 28 of 1.451 percent and 1.863 percent, while seven-year yields hit their lowest since Feb. 27 of 2.147 percent and two-year yields touched a one-week low of 1.234 percent. "Certainly the Trump-flation trade seems a lot more wobbly now," said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York. "There is no real reason to be aggressively maintaining a big short base in Treasuries." U.S. 30-year Treasury bonds were last up 31/32 in price to yield 2.968 percent, from a yield of 3.017 percent late Friday. U.S. 10-year Treasury notes were up 16/32 in price to yield 2.337 percent, from a yield of 2.395 percent late Friday. April 3 Monday 11:45AM New York / 1545 GMT Price US T BONDS JUN7 152-5/32 1-10/32 10YR TNotes JUN7 125-24/256 0-136/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.755 0.7669 0.005 Six-month bills 0.8875 0.9038 0.000 Two-year note 100-8/256 1.234 -0.024 Three-year note 100-130/256 1.4482 -0.049 Five-year note 100-10/256 1.8667 -0.061 Seven-year note 99-212/256 2.1516 -0.065 10-year note 99-64/256 2.3354 -0.060 30-year bond 100-172/256 2.9658 -0.051 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 35.25 -1.50 spread U.S. 3-year dollar swap 31.00 -1.00 spread U.S. 5-year dollar swap 13.00 0.25 spread U.S. 10-year dollar swap -0.50 0.25 spread U.S. 30-year dollar swap -37.00 -0.25 spread (Reporting by Sam Forgione; Editing by James Dalgleish)