March 18, 2020 / 7:11 AM / 23 days ago

TREASURIES-Yields edge up on Fed action, possible U.S. stimulus

TOKYO, March 18 (Reuters) - The benchmark U.S. 10-year Treasury yield edged up in Asia on Wednesday after the U.S. Federal Reserve’s plan to underwrite short-term corporate loans eased some market jitters and reduced demand for the safety of government debt.

The yield on the 10-year note rose to 1.0019%.

On Tuesday, benchmark yields hit 1.1050%, the highest since March 3, as risk appetite improved after the Fed said it will relaunch financial crisis-era purchases of short-term corporate debt to thaw credit markets strained by the coronavirus pandemic.

The Fed and other central banks have eased policy and taken steps to boost liquidity this week after fears about the virus triggered the biggest tumble in stocks since the crash of 1987.

On Sunday, the central bank cut interest rates to near zero and launched a $700 billion quantitative easing programme in anticipation of major economic disruptions caused by the global spread of the coronavirus.

Yields on 30-year bonds rose to 1.6116% in Asia, while two-year Treasury note yields fell slightly to 0.4296%.

The two-year/10-year yield spread narrowed in Asia but last stood at 57 basis points, which is close to its widest since May 2018. The three-month/10-year yield curve also narrowed slightly but remained well in positive territory.

Yields at the longer end of the curve rose due to concerns about U.S. fiscal spending after President Donald Trump’s administration pressed for a $1 trillion stimulus package, possibly including $1,000 direct payments to individual Americans, to blunt the economic pain from the virus outbreak that has killed over 100 people in the country.

Treasuries have fluctuated wildly recently as investors come to grips with the fallout from the virus crisis, because severe restrictions on personal movement aimed at curbing the virus are likely to push several countries into recession.

The flu-like virus has killed more than 8,000 people globally, while the total number of infections is approaching 200,000, a Reuters tally shows. (Reporting by Stanley White; Editing by Himani Sarkar)

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