March 3, 2020 / 7:30 PM / 3 months ago

TREASURIES-U.S. 10-year yields fall below 1% for first time ever

    * Fed cuts rates by 50 basis points
    * U.S. yield curve steepens
    * Rates futures raise bets for another cut in April

 (Adds new comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, March 3 (Reuters) - U.S. benchmark 10-year
Treasury yields on Tuesday fell to a record low below 1% after
the Federal Reserve slashed interest rates by 50 basis points in
an emergency move to ease the economic fallout from the
fast-spreading coronavirus.
    U.S. yields were down across the board after the Fed action,
as investors grabbed safe-haven Treasuries amid the uncertainty.
    In a statement, the central bank said it was cutting rates
to a target range of 1.00% to 1.25%. "The fundamentals of the
U.S. economy remain strong. However, the coronavirus poses
evolving risks to economic activity," it said.
     Investors expected the Fed to cut interest rates after the
Fed issued a statement late on Friday. But they did not expect
it to move so quickly ahead of a scheduled monetary policy
meeting later this month.
    "The Fed kind of botched the operation here. They didn't
need to cut rates because it wouldn't do anything to prevent the
virus from spreading," said Kim Rupert, managing director of
global fixed income at Action Economics in San Francisco.
    "Once again, the Fed gave into the market and I think this
has unnerved investors. The whole thing appears ill-conceived,"
she added.
    In early afternoon trading, U.S. 10-year yields
fell to 0.96%, from 1.088% late on Monday. Earlier in the
session, 10-year yields hit a record low of 0.906%.
      March 3 Tuesday 2:21PM New York / 1921 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.915        0.9324    -0.237
 Six-month bills               0.825        0.84      -0.187
 Two-year note                 100-236/256  0.6577    -0.168
 Three-year note               102-16/256   0.6679    -0.160
 Five-year note                102-14/256   0.7051    -0.159
 Seven-year note               101-212/256  0.855     -0.141
 10-year note                  105-16/256   0.9652    -0.123
 30-year bond                  110-16/256   1.5771    -0.068
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         7.00         0.50    
 U.S. 3-year dollar swap         5.25        -0.50    
 U.S. 5-year dollar swap         5.75        -0.50    
 U.S. 10-year dollar swap       -3.00        -1.25    
 U.S. 30-year dollar swap      -40.25        -2.25    
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Karen Brettell; editing by Jonathan Oatis and Dan Grebler)
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