June 4, 2020 / 6:36 PM / a month ago

TREASURIES-Longer-term yields jump on stimulus efforts, jobless claims

 (Updates with market activity, analyst comment)
    By Ross Kerber
    June 4 (Reuters) - Longer-term U.S. Treasury yields jumped
on Thursday to levels not seen in months as European stimulus
efforts and a slightly less grim U.S. jobs report helped support
investor confidence.
    The benchmark 10-year yield was up 5.7 basis
points in afternoon trading at 0.8184%. It touched as high as
0.822%, the most since March 27. 
    The movement continued a risk-on trend this week and sent a
closely-watched part of the yield curve higher. 
    The European Central Bank said it would raise emergency bond
purchases by 600 billion euros ($674 billion). Also
the number of Americans filing for unemployment benefits dropped
below 2 million last week.
    The morning reports helped spark a rally on Wall Street that
later fizzled. But Treasury yields held their
gains, showing investors starting to move money out of the
government securities, said Michael Lorizio, senior fixed income
trader at Manulife Investment Management.
    "The performance of risk assets has been so strong, you're
seeing more market participants go with that move and to fund
that you're seeing some Treasury sales, for sure," he said.
    He and others said investors will need more positive data
such as for the third quarter of 2020 for yields to fully
recover to pre-pandemic levels, around 2% for the 10-year note.
    "We know the data is bad for Q2; we'll see what Q3 brings as
economies reopen," said Justin Lederer, Cantor Fitzgerald
treasury analyst.
    The 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 62 basis
points, about 7 basis points higher than Wednesday's close and
the highest since March 20.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down less
than a basis point at 0.196%.
      June 4 Thursday 2:11PM New York / 1811 GMT
                               Price                  
 US T BONDS SEP0               174-3/32     -1-13/32  
 10YR TNotes SEP0              137-200/256  -0-104/2  
                                            56        
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1525       0.1547    0.000
 Six-month bills               0.175        0.1781    0.000
 Two-year note                 99-220/256   0.196     -0.004
 Three-year note               99-160/256   0.253     0.003
 Five-year note                99-60/256    0.4053    0.028
 Seven-year note               99-16/256    0.6374    0.048
 10-year note                  98-40/256    0.8184    0.057
 30-year bond                  91-80/256    1.6172    0.066
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         7.75         0.75    
 spread                                               
 U.S. 3-year dollar swap         4.75         0.50    
 spread                                               
 U.S. 5-year dollar swap         3.75         0.25    
 spread                                               
 U.S. 10-year dollar swap       -1.00         0.25    
 spread                                               
 U.S. 30-year dollar swap      -48.00         0.50    
 spread                                               
 
 (Reporting by Ross Kerber in Boston; editing by Jonathan Oatis
and Diane Craft)
  
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