March 18, 2020 / 1:32 PM / 19 days ago

TREASURIES-Yields rise as investors weigh U.S. pandemic response

    By Ross Kerber
    BOSTON, March 18 (Reuters) - U.S. Treasury yields were
higher on Wednesday, though off their session peaks, as
investors watched for the U.S. response to the coronavirus
pandemic to take shape.
    The benchmark 10-year yield was up 13 basis
points in morning trading at 1.1257%, after reaching above 1.22%
early in the morning.
    Stan Shipley, macro research analyst for Evercore ISI, said
many traders do not know what to do as they sort out various
moves by central banks and the Trump administration responding
to the health emergency and shoring up the economy.
    "Yields are very volatile right now. There's a lot of
technical issues going on, he said.
    With the Federal Reserve having already lowered its target
interest rates close to zero, the next step should be a massive
U.S. spending plan, he said. "We need a big fiscal package, over
$1.5 trillion, it could be $2 trillion."
    The trading followed an overnight sell-off in government
bonds globally and in equity markets.
    Cases of the respiratory illness have been reported in all
50 U.S. states and millions of Americans are staying home from
work. 
    In response the Trump administration on Tuesday pressed for
a $1 trillion stimulus package, possibly to include $1,000
direct payments to individual Americans.
    For its part, the Fed on Tuesday said it would reopen the
so-called Commercial Paper Funding Facility to underwrite the
short-term loans that companies often use to pay for their
operations, a key financial market backstop first set up 2007 to
2009.
    It also extended its reach as the economy's lender of last
resort to the two dozen Wall Street primary dealers, by letting
them pledge municipal bonds, corporate debt and equity
securities as collateral for 90-day Fed loans in order to keep
credit flowing.
    The two-year  U.S. Treasury yield, which
typically moves in step with interest rate expectations, was
down less than a basis point at 0.4576% in morning trading.
      March 18 Wednesday 9:11AM New York / 1311 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.075        0.0763    -0.132
 Six-month bills               0.185        0.1877    -0.051
 Two-year note                 101-75/256   0.4576    -0.003
 Three-year note               99-188/256   0.5898    0.048
 Five-year note                101-224/256  0.7384    0.088
 Seven-year note               100-182/256  1.0187    0.125
 10-year note                  103-128/256  1.1257    0.130
 30-year bond                  106-144/256  1.7184    0.138
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         7.75         1.00    
 spread                                               
 U.S. 3-year dollar swap         0.00        -3.00    
 spread                                               
 U.S. 5-year dollar swap         1.50        -5.00    
 spread                                               
 U.S. 10-year dollar swap      -13.00        -6.75    
 spread                                               
 U.S. 30-year dollar swap      -72.25        -8.00    
 spread                                               
 







 (Reporting by Ross Kerber)
  
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