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Fed's Powell says December rate cut not guaranteed

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US Treasury yields rise amid lower rate-cut odds

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Government shutdown's effect on data may affect policy

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Meta $30 billion bond sale attracts strong investor demand

(Updates bond yields, adds quotes and Meta corporate bond

issuance)

By Tatiana Bautzer

NEW YORK, Oct 30 (Reuters) - U.S. Treasury yields

continued to rise on Thursday as markets saw lower odds of

another Federal Reserve interest rate cut in December and amid a

huge corporate bond deal from Meta Platforms ( META ) that has spurred

selling of Treasuries for hedging purposes.

Fed Chair Jerome Powell comments on Wednesday about another

interest rate cut in December not being a "foregone

conclusion" caught markets off guard, and lowered the odds on

easing for that month.

Investors flocked to large new corporate bond issues, such

as Meta Platforms' ( META ) $30 billion offered on Thursday.

"There was a very large demand for the bonds, up to four

times the total, and that contributed to higher yields seen on

Treasuries," said Lou Brien, market strategist at DRW Trading in

Chicago.

Meta's spending on AI disappointed the stock market, but the

company was very successful in its bond offering with maturities

ranging from 5 years to 30 and 40 years. The spread over

Treasuries ranged from 50 basis points in the 5-year bond to 110

basis points in the 40-year, according to IFR News.

Wall Street dealers typically look to lock in borrowing

costs for corporate bonds they are underwriting. As part of that

process, a dealer sells Treasuries as a hedge to lock in the

borrowing cost on the bond issue before the deal is completed.

The yield on the benchmark U.S. 10-year Treasury note

rose 3.5 basis points to 4.093%.

Investors also worried about how the extended U.S. federal

government shutdown, now on its 30th day, may affect future

monetary policy, considering the lack of U.S. macroeconomic

data.

The two-year U.S. Treasury yield, which

typically moves in step with interest rate expectations, rose

2.6 basis points to 3.612%.

"We may have another month in which labor market data will

not be collected if the government shutdown does not end soon,"

said Guy LeBas, chief fixed income strategist at Janney Capital

Management in Philadelphia. "We expect to have private data

available, but it's not clear how the Fed will consider it".

The odds for a rate cut at the Fed's December 9-10 meeting

are still quite high, 72% according to CME's FedWatch tool,

despite the lack of data, LeBas added. The reduction of import

tariffs on products coming from China to the U.S. also may help

reduce pressures, he added.

A closely watched part of the U.S. Treasury yield curve

measuring the gap between yields on two- and 10-year Treasury

notes, seen as an indicator of economic

expectations, was at a positive 47.7 basis points, a little

higher than on Wednesday.

The European Central Bank, meanwhile, kept interest rates

unchanged for the third meeting in a row on Thursday and offered

no hints about future moves as it enjoys a rare period of low

inflation and steady growth, even in the face of trade

turbulence.