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TREASURIES-Yields flat after U.S. durable goods data

 (Adds George comments, updates prices)
    By Chuck Mikolajczak
    Sept 25 (Reuters) - U.S. Treasury yields moved off earlier
lows on Friday in the wake of an upbeat report on U.S. durable
goods, while stocks shook off a weaker start to turn higher. 
    The Commerce Department said orders for non-defense capital
goods excluding aircraft, a closely watched proxy for business
spending plans, rose 1.8% in August, above the 0.5% forecast.

    The report did little, however, to alter views that the
economy was slowing down in its recovery from
coronavirus-induced lockdowns as government support to
businesses and the unemployed peters out. 
    "Overall, it is more trends and it doesn’t feel that data is
going to cause some massive volatility in the market the way it
did and the way it will in six months," said Justin Lederer, an
interest rate strategist at Cantor Fitzgerald in New York. 
    Democrats in the U.S. House of Representatives are working
on a $2.2 trillion coronavirus stimulus package that could be
voted on next week, a key lawmaker said on Thursday, as House
Speaker Nancy Pelosi reiterated that she is ready to negotiate
with the White House.
    Analysts at Jefferies noted that while the report points to
a large capital expenditures contribution to economic growth in
the third quarter, sustaining the momentum beyond that "will be
difficult."     
    The yield on 10-year Treasury notes was down 0.1
basis points to 0.663% after falling as low as 0.651% on the
day. 
    Kansas City Federal Reserve president Esther George said on
Friday that the impact of the recession on households and
businesses could still lead to a strain on the banking system
which would deepen the recession, the second Fed official to
warn of credit issues this week.
    The yield on the 10-year remained within the 6-basis-point
range it has held since the Federal Reserve's most recent policy
statement on Sept. 16, even as equities have struggled. The S&P
500 is poised to post its fourth straight week of
declines. 
    "Overall the market remains fairly rangebound. There is some
intraday, intra-week volatility that when you really look at it,
we just don’t go anywhere," said Lederer. 
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was
down 0.2 basis points to 0.133%. 
    A closely watched 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 52.8 basis points, up slightly from a
two-week low of 51.2 hit on Monday.
    
      September 25 Friday 2:33PM New York / 1833 GMT
                               Price                  
 US T BONDS DEC0               176-30/32    -0-1/32   
 10YR TNotes DEC0              139-156/256  0-8/256   
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1          0.1014    0.002
 Six-month bills               0.11         0.1116    0.003
 Two-year note                 99-252/256   0.1328    -0.002
 Three-year note               99-234/256   0.1541    -0.005
 Five-year note                99-232/256   0.2689    -0.006
 Seven-year note               99-112/256   0.4567    -0.005
 10-year note                  99-164/256   0.6626    -0.001
 20-year bond                  98-236/256   1.186     0.003
 30-year bond                  99-32/256    1.411     0.010
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         9.00         0.00    
 spread                                               
 U.S. 3-year dollar swap         8.50         0.25    
 spread                                               
 U.S. 5-year dollar swap         6.75         0.25    
 spread                                               
 U.S. 10-year dollar swap        2.50         0.25    
 spread                                               
 U.S. 30-year dollar swap      -34.00         0.00    
 spread (Reporting by Chuck Mikolajczak; Editing by Dan Grebler and
Cynthia Osterman)
  
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