March 9, 2020 / 5:35 PM / 21 days ago

TREASURIES-US Treasury yields climb from record lows but virus fears remain

 (Recasts, updates yields, adds analyst comment)
    NEW YORK, March 9 (Reuters) - U.S. Treasury yields bounced
off record lows but held lower on the day on Monday as worries
over the spreading coronavirus and oil price declines sparked a
massive selloff in equities.
    After falling as low as 0.318% in early trading, the 10-year
Treasury yield climbed back to 0.512%.
    "It does look like risk markets are recovering a little bit,
so maybe it's some investors buying the dip in equities," said
Gennadiy Goldberg, senior U.S. rates strategist at TD Securities
in New York. 
    He cautioned that while he has not seen any particular
positive news, "liquidity is still very thin, so I wouldn't read
into market moves here just because there is not a lot of volume
behind some of these moves."
    As global share markets tumbled, investors fled headlong to
bonds to hedge the economic trauma of the coronavirus, and oil
plunged more than 30% after Saudi Arabia opened the taps in a
price war with Russia.
    Trading in U.S. equities was temporarily halted after the
benchmark S&P 500 fell 7%, triggering an automatic
15-minute stoppage.
    "There's an obvious panic-buying spree in place (for
Treasuries) and, as with every panic buying spree, there is no
way to guess where it stops," said Guy LeBas, chief fixed income
strategist at Janney Montgomery Scott in Philadelphia.
    Thirty-year Treasury yields were also off their record low
of 0.70%, last trading at 0.904%.
    Two-year note yields, which had tumbled to 0.251%
, their lowest since October 2014, recovered to
0.391%. They have fallen for 13 straight sessions.
    Interest rate futures traders are now fully pricing in an
additional 75 basis point rate cut at this month's Federal
Reserve meeting and a 55% probability that the Fed will cut
rates back to the 0% to 0.25% band, according to the CME Group's
FedWatch Tool.
  March 9 Monday 1:00PM New York / 1700 GMT
                               Price        Current   Net Change
                                            Yield %   (bps)
 Three-month bills             0.4075       0.4147    -0.060
 Six-month bills               0.375        0.3809    -0.023
 Two-year note                 101-113/256  0.3908    -0.086
 Three-year note               102-202/256  0.4176    -0.090
 Five-year note                103-58/256   0.4678    -0.086
 Seven-year note               104-14/256   0.5319    -0.130
 10-year note                  109-144/256  0.5115    -0.196
 30-year bond                  128-176/256  0.904     -0.311
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        10.50        -2.25    
 U.S. 3-year dollar swap         9.75        -0.75    
 U.S. 5-year dollar swap         9.75        -1.00    
 U.S. 10-year dollar swap       10.00         4.00    
 U.S. 30-year dollar swap      -31.75         5.00    

 (Reporting by Karen Brettell in New York, Karen Pierog in
Chicago and Dhara Ranasinghe in London; Editing by Jonathan
Oatis and Nick Zieminski)
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