May 19, 2020 / 7:22 PM / 15 days ago

TREASURIES-Yields lower, but unmoved by Fed chair's Senate testimony

 (Recasts, updates yields, adds analyst comment)
    May 19 (Reuters) - U.S. Treasury yields fell on Tuesday as
Federal Reserve Chair Jerome Powell shed no new light on the
government's economic response to the coronavirus pandemic and
the market looked ahead to the return of the 20-year bond.
   The benchmark 10-year yield was last down 3.3
basis points at 0.7094%.
    Powell "stuck pretty much to his message," said Kathy Jones,
chief fixed income strategist at the Schwab Center for Financial
Research in New York. "The lack of reaction in the market is
probably because he didn't say anything really new."
    In testimony before the U.S. Senate Banking Committee,
Powell said the central bank was continuing to consider ways to
accommodate additional borrowers, and that Congress should
consider anything to keep people out of insolvency.
    Meanwhile, Wednesday's auction of $20 billion of 20-year
bonds, the first in decades, should be met with "plenty of
demand," according to Bill Merz, head of fixed income research
at U.S. Bank Wealth Management in Minneapolis.
    "It provides one more financing option for the Treasury and
it fills a need for some investors who are more active on the
long end of the curve," he said.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last down 1.2
basis points at 0.1712%.
    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 53.17 basis points, about 4 basis points
higher than on Monday's close.
   Bids submitted in a Tuesday morning overnight repurchase
agreement (repo) operation totaled $1 billion, backed by
mortgage-backed securities, according to the New York Federal
Reserve, which said it accepted all the bids.
   May 19 Tuesday 2:09PM New York / 1909 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1275       0.1297    -0.002
 Six-month bills               0.1525       0.1547    0.000
 Two-year note                 99-233/256   0.1712    -0.012
 Three-year note               99-184/256   0.2195    -0.019
 Five-year note                100-36/256   0.3463    -0.031
 Seven-year note               99-188/256   0.539     -0.032
 10-year note                  99-48/256    0.7094    -0.033
 30-year bond                  95-148/256   1.4319    -0.024
                                                      
   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         5.50         0.00    
 spread                                               
 U.S. 5-year dollar swap         3.25         0.00    
 spread                                               
 U.S. 10-year dollar swap       -2.50        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -48.00        -0.50    
 spread                                               
 

 

 (By Karen Pierog in Chicago; Editing by David Gregorio and
Richard Chang)
  
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