July 20, 2020 / 2:33 PM / 18 days ago

TREASURIES-Yields inch lower as new supply looms

    By Karen Pierog
    CHICAGO, July 20 (Reuters) - U.S. Treasury yields dipped on
Monday in range-bound trading as stocks opened mixed and the
market awaited the latest burst of supply.  
    The benchmark 10-year yield was last down 2.3
basis points at 0.6053%.
    Bill Merz, head of fixed income research at U.S. Bank Wealth
Management in Minneapolis, said while yields were trending
lower, they remain range bound as a new round of debt supply
looms. 
    The Treasury Department will sell $17 billion of 20-year
bonds on Wednesday and $14 billion of 10-year Treasury-Inflation
Protected Securities (TIPS) on Thursday.
    "The amount of net issuance earlier this year was just
astounding and we made it through with minimal disruption and
minimal volatility in Treasury yields when that issuance was
picking up," Merz said. "That gives us confidence that what
we're likely to see here in the next couple of months in terms
of issuance is not going to be a major event for the market."
   Also this week, a new round of stimulus payments to prop up
the sagging economy will be the focus in the U.S. Congress.

   Risk appetite has seesawed as investors weigh a rise in the
number of U.S. cases, deaths, hospitalizations and positivity
rates of test results against promising developments on the
vaccine front.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down less
than a basis point at 0.1431%.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, which is viewed as an indicator of
economic expectations, was at 46 basis points, about 1.6 basis
points lower than at Friday's close.
    July 20 Monday 9:23AM New York / 1423 GMT
                                                      
 US T BONDS SEP0               180-12/32    0-21/32   
 10YR TNotes SEP0              139-136/256  0-44/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1125       0.1141    -0.003
 Six-month bills               0.13         0.1319    0.000
 Two-year note                 99-247/256   0.1431    -0.004
 Three-year note               99-222/256   0.1696    -0.005
 Five-year note                99-232/256   0.2691    -0.013
 Seven-year note               100-88/256   0.4496    -0.018
 10-year note                  100-48/256   0.6053    -0.023
 20-year bond                  100-216/256  1.0776    -0.027
 30-year bond                  98-176/256   1.3032    -0.026
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         7.25        -0.25    
 spread                                               
 U.S. 3-year dollar swap         5.25        -0.25    
 spread                                               
 U.S. 5-year dollar swap         3.75         0.00    
 spread                                               
 U.S. 10-year dollar swap       -2.00        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -46.25        -0.50    
 spread                                               
                                                      
 

 (Reporting by Karen Pierog in Chicago; editing by Jonathan
Oatis)
  
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