July 15, 2020 / 7:15 PM / 24 days ago

TREASURIES-Yield rise as COVID vaccine hopes boost risk appetite

 (Adds Fed's Harker, Beige Book; updates prices)
    By Karen Brettell
    NEW YORK, July 15 (Reuters) - U.S. Treasury yields rose and
the yield curve steepened on Wednesday as hopes of a COVID-19
vaccine boosted risk appetite and reduced demand for safe-haven
bonds.
    Moderna Inc's experimental vaccine for COVID-19
showed it was safe and provoked immune responses in all 45
healthy volunteers in an ongoing early-stage study, U.S.
researchers reported on Tuesday.
    “The market is trading fairly ‘risk on’ on vaccine hopes,”
said Gennadiy Goldberg, an interest rate strategist at TD
Securities in New York. “It’s largely COVID news driving the
price action recently.”
    Investors are wary about new economic damage as a sharp rise
in COVID infections in many U.S. states leads to new shutdowns
aimed at stemming the spread of the virus. 
    Benchmark 10-year notes rose two basis points to
0.630%. They have held in a tight range from 0.569% to 0.784%
since mid-June.
    The yield curve between two-year and 10-year notes
 steepened one basis point to 47 basis points.
    A Federal Reserve report on Wednesday showed that U.S.
businesses saw an uptick in activity into the beginning of July
as states eased restrictions to contain the novel coronavirus
pandemic, but many businesses were uncertain about the economic
outlook.
    The United States has failed to control the coronavirus and
there is a high level of uncertainty over how much the pandemic
will affect the economy, Philadelphia Federal Reserve Bank
President Patrick Harker said on Wednesday.
    Data showed that U.S. factory output rose 7.2% in June, the
most in more than 74 years, as motor vehicle production
accelerated amid the reopening of businesses, but the nascent
recovery in manufacturing activity was overshadowed by surging
new COVID-19 infections.
    The next major economic focuses are jobless claims and
retail sales on Thursday.
    
    July 15 Wednesday 3:00PM New York / 1900 GMT
                               Price                  
 US T BONDS SEP0               179-24/32    -0-17/32  
 10YR TNotes SEP0              139-92/256   -0-16/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.135        0.1369    -0.008
 Six-month bills               0.14         0.142     -0.005
 Two-year note                 99-241/256   0.155     0.000
 Three-year note               99-214/256   0.1799    0.000
 Five-year note                99-212/256   0.285     0.003
 Seven-year note               100-52/256   0.4703    0.009
 10-year note                  99-244/256   0.6299    0.016
 20-year bond                  100-88/256   1.1056    0.027
 30-year bond                  98           1.3314    0.030
                                                      
   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         5.25         0.75    
 spread                                               
 U.S. 5-year dollar swap         3.75         0.50    
 spread                                               
 U.S. 10-year dollar swap       -2.25         0.25    
 spread                                               
 U.S. 30-year dollar swap      -47.00         0.00    
 spread                                               
                                                      
 

    
    
    
    

 (Reporting by Karen Brettell; editing by Jonathan Oatis and
Leslie Adler)
  
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