July 10, 2020 / 2:03 PM / a month ago

TREASURIES-Longer-term yields fall as COVID-19 cases boost safe-haven demand

    By Ross Kerber
    July 10 (Reuters) - Longer-term U.S. Treasury yields fell on
Friday as a record increase in coronavirus cases pushed out
economic recovery hopes, driving investors into the safe-haven
securities.
    The yield on the benchmark 10-year U.S. Treasury note
 was down 1.1 basis points at 0.5939% in morning
trading, after touching as low 0.569% earlier in the session -
its lowest since April 22.
    Until late on Thursday, the 10-year note had traded above
0.6% since May 15. The break below showed investors worried that
a rising virus caseload would push off an economic recovery,
said Priya Misra, head of global rates strategy for TD
Securities.
    "It's a risk-off day on Treasuries, which is really the
safe-haven with the virus infections increasing," she said.
"We're learning we will have to live with this for a while, and
that's going to hurt growth," she said.
     More than 60,500 new COVID-19 infections were reported
across the United States on Thursday, according to a Reuters
tally, setting a one-day record.
    Robert Kaplan, president of the Federal Reserve Bank of
Dallas, said in a television interview that muting the virus'
spread is key to an economic recovery.
    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 45 basis points, about a basis point lower
than on Thursday's close. At one point it touched 42.7 basis
points, its lowest since May 4.
    The two-year  U.S. Treasury yield, which
typically moves in step with interest rate expectations, was
down a basis point at 0.1409% in morning trading.
      July 10 Friday 9:36AM New York / 1336 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
                                                      
 Six-month bills               0.145        0.1471    -0.008
 Two-year note                 99-248/256   0.1409    -0.010
 Three-year note               99-224/256   0.1668    -0.008
 Five-year note                99-228/256   0.2722    -0.002
 Seven-year note               100-88/256   0.4498    -0.004
 10-year note                  100-76/256   0.5939    -0.011
 20-year bond                  101-44/256   1.0593    -0.025
 30-year bond                  99-80/256    1.2778    -0.031
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         6.50         0.50    
 spread                                               
 U.S. 3-year dollar swap         4.50         0.50    
 spread                                               
 U.S. 5-year dollar swap         3.50         0.25    
 spread                                               
 U.S. 10-year dollar swap       -1.75         0.50    
 spread                                               
 U.S. 30-year dollar swap      -47.00         1.00    
 spread                                               
                                                      
 
 (Reporting by Ross Kerber in Boston
Editing by Nick Zieminski)
  
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