TREASURIES-US Treasuries yield rise as Trump ramps up attacks on Powell

By Tatiana Bautzer

NEW YORK, April 21 (Reuters) - Longer-dated U.S. Treasury yields rose as investors watched with concern the escalating Trump administration attacks on Federal Reserve chairman Jerome Powell, that continued over the weekend and on Monday.

The yield on the benchmark U.S. 10-year Treasury note US10YT=TWEB was up 5.2 basis points on Monday morning trading to 4.379%. The yield on the 30-year bond US30YT=TWEB rose 6.6 basis points to 4.875%.

White House economic adviser Kevin Hassett on Friday said President Donald Trump and his team were continuing to study whether they could fire Powell, a sign that such a move, which would have wide consequences for global markets, is still an option.

Hassett's remarks came a day after Trump ramped up a long-simmering feud with the Fed chair, accusing Powell of "playing politics" by not cutting interest rates and asserting he had the power to evict Powell from his job "real fast."

On Friday Trump told reporters during an Oval Office event, "If we had a Fed chairman that understood what he was doing, interest rates would be coming down. He should bring them down."

"Trump's comments on Powell are keeping the pressure on U.S. assets, including stocks and the long Treasuries," said Vail Hartman, U.S. rates strategist at BMO Capital Markets in New York. "The reaction may have been exacerbated by low liquidity with some markets closed overnight, but surely the debate on whether to fire or not the Fed chairman does not help", he added.

The two-year US2YT=TWEB U.S. Treasury yield, which typically moves in step with interest rate expectations, fell 3.2 basis points to 3.764%. Markets expect the Fed to cut rates in June, and an additional two or three times by year-end.

On Monday, president Trump again pressured the U.S. central bank publicly on social media. "Preemptive interest rate cuts have been called for by many", he wrote in a post on Truth Social. Citing lower energy prices, Trump said the economy could decelerate unless "mr. Too Late, a major loser, cuts interest rates NOW".

“This isn’t just a disagreement over timing. It’s a power struggle between fiscal force and monetary independence,” said Nigel Green, CEO of deVere Group. “Markets are reacting. And they should be.”

(Reporting by Tatiana Bautzer, Editing by Nick Zieminski)

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