June 26, 2020 / 2:09 PM / 11 days ago

TREASURIES-Longer-term yields edge down as COVID-19 cases surge

    By Ross Kerber
    June 26 (Reuters) - Longer-term U.S. Treasury yields ticked
down on Friday as continuing public health concerns offset a
rebound in consumer spending.    
    The benchmark 10-year yield was a basis point
lower at 0.6643%.
    The Commerce Department said consumer spending, which
accounts for more than two-thirds of U.S. economic activity,
jumped 8.2% last month after falling 12.6% in April.

    But the gains were not seen as sustainable amid high
unemployment and as the United States set a new record for a
one-day increase in COVID-19 cases. 
    Traders seem unlikely to move the 10-year yield away from
the zone between 60 to 70 basis points where it has mostly
traded since late March, said Andrew Richman, director of fixed
income strategies for Truist/SunTrust Advisory Services.
    "We're in a trading range," Richman said, one that will
continue until a successful effort to contain the virus allows
businesses to reopen with confidence.
     Wall Street's main indexes opened lower on Friday and bank
stocks fell following the Federal Reserve's move to cap
shareholder payouts. 
    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 49 basis points - well below its monthly
high of 72 basis points reached on June 5.
            
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down less
than a basis point at 0.1759% in morning trading.
    
      June 26 Friday 9:42AM New York / 1342 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1425       0.1445    0.002
 Six-month bills               0.17         0.1725    0.000
 Two-year note                 99-230/256   0.1759    -0.008
 Three-year note               100-42/256   0.1944    -0.011
 Five-year note                99-174/256   0.3146    -0.011
 Seven-year note               99-246/256   0.5057    -0.015
 10-year note                  99-160/256   0.6643    -0.010
 20-year bond                  99-48/256    1.1709    -0.015
 30-year bond                  96-68/256    1.4034    -0.014
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         7.00         0.25    
 spread                                               
 U.S. 3-year dollar swap         5.75         0.25    
 spread                                               
 U.S. 5-year dollar swap         3.75         0.25    
 spread                                               
 U.S. 10-year dollar swap       -1.25         0.00    
 spread                                               
 U.S. 30-year dollar swap      -48.75         0.00    
 spread                                               
                                                      
 

    
 (Reporting by Ross Kerber in Boston; editing by Jonathan Oatis)
  
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