TREASURIES-Yields climb as France's Bayrou pulls out from French elections

By

Gertrude Chavez-Dreyfuss

NEW

YORK

, Feb 22 (

Reuters

) - U.S. long-dated

Treasury

debt yields rose from two-week lows on Wednesday, after French centrist presidential candidate

Francois Bayrou

pulled out of the elections in

France

and offered an alliance with independent candidate Emmanuel Macron. This meant that

Macron

together with Bayrou's support will have a better chance of defeating leading far-right presidential candidate

Marine Le Pen

, who has vowed to lead France out of the European Union, analysts said. Yields on German Bund bonds and U.S. Treasuries rose on the news since there was less of a search for safety given the perception of

Le

Pen's reduced chances at winning the presidency, said

Lou Brien

, a market strategist at

DRW Trading

in

Chicago

. "That latest development should be enough to push Macron back into the second place of the first round, or maybe even the first place," he added. U.S. Treasuries have been sensitive of late to global developments such as the French elections, whose first round is in April. Increased prospects of a

Le Pen

victory have tended to weigh on yields on German, French and British bonds and sometimes have a knock-on effect on Treasuries. In morning trade, U.S. 10-year notes were last flat in price to yield 2.429 percent. But 10-year yields have recovered most of their losses. They fell as low as 2.391 percent, their weakest level since Feb. 9. U.S. 30-year bond prices were down 3/32, yielding 3.043 percent, up from Tuesday's 3.037 percent. Yields earlier dropped to 2.999 percent, their lowest in two weeks. In the

United States

, investors are looking to the release of the latest

Federal Reserve

minutes for clues about the timing of the next interest rate hike.

Fed

Chair

Janet Yellen

said last week that a rate increase would be considered at every policy meeting, leading people to speculate that the next would be in March. (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by

Sam Forgione

Editing by

W Simon

)
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