July 20, 2020 / 7:33 PM / 18 days ago

TREASURIES-Longer-term yields inch lower as new supply looms

 (Recasts, updates yields, adds analyst comments)
    By Karen Pierog
    CHICAGO, July 20 (Reuters) - U.S. Treasury yields on the
long end of the curve were a touch lower on Monday amid
strengthening stocks and ahead of new supply this week. 
    The benchmark 10-year yield was last down 1
basis point at 0.6184%.
    Kim Rupert, senior economist at Action Economics in San
Francisco, said Treasuries were trading in a narrow range as
they tracked equities "a little bit."
    "As Wall Street started to improve and the NASDAQ has really
jumped, we saw some of the bid come out of Treasuries," she
said.
    Risk appetite has seesawed as investors weigh a rise in the
number of U.S. coronavirus cases, deaths, hospitalizations, and
rates of positive test results against promising vaccine
developments.
     On the supply front, the Treasury Department will sell $17
billion of 20-year bonds on Wednesday and $14 billion of 10-year
Treasury-Inflation Protected Securities (TIPS) on Thursday.
    Bill Merz, head of fixed income research at U.S. Bank Wealth
Management in Minneapolis, said the Treasury market was able to
get through massive supply earlier this year "with minimal
disruption and minimal volatility" in yields. 
    "That gives us confidence that what we're likely to see here
in the next couple of months in terms of issuance is not going
to be a major event for the market," he said.
   Also this week, negotiations over a new round of stimulus
payments to prop up the coronavirus-hit economy will be the
focus in the U.S. Congress.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was up less than
a basis point at 0.1492%.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, which is viewed as an indicator of
economic expectations, was at 46.80 basis points, about a basis
point lower than at Friday's close.
   July 20 Monday 2:06PM New York / 1906 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.115        0.1166    0.000
 Six-month bills               0.1275       0.1294    -0.003
 Two-year note                 99-244/256   0.1492    0.002
 Three-year note               99-216/256   0.1775    0.002
 Five-year note                99-214/256   0.2835    0.001
 Seven-year note               100-60/256   0.4656    -0.002
 10-year note                  100-16/256   0.6184    -0.010
 20-year bond                  100-156/256  1.0907    -0.014
 30-year bond                  98-100/256   1.3154    -0.014
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         7.00        -0.50    
 spread                                               
 U.S. 3-year dollar swap         5.00        -0.50    
 spread                                               
 U.S. 5-year dollar swap         3.25        -0.50    
 spread                                               
 U.S. 10-year dollar swap       -2.50        -0.75    
 spread                                               
 U.S. 30-year dollar swap      -47.00        -1.25    
 spread                                               
                                                      
 

 (Reporting by Karen Pierog in Chicago; editing by Jonathan
Oatis and Chizu Nomiyama)
  
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