June 16, 2020 / 7:25 PM / 19 days ago

TREASURIES-Yields rise as stimulus hopes, retail sales boost risk appetite

 (Adds Powell comments, updates prices)
    By Karen Brettell
    NEW YORK, June 16 (Reuters) - U.S. Treasury yields rose on
Tuesday as hopes of further fiscal stimulus boosted risk
appetite, and after data showed a record rise in U.S. retail
sales in May.
    Stocks gained on a report that the Trump administration is
preparing a nearly $1 trillion infrastructure proposal as part
of its push to spur the world's largest economy back to life.

    Risk sentiment was further uplifted after the Commerce
Department said overall retail receipts rose 17.7% last month
after falling by a record 14.7% in April, as 2.5 million
Americans went back to work and people began moving about more
freely.
    "It was a pretty big blowout relative to expectations," said
Tom Simons, a money market economist at Jefferies in New York.
"The data prints have been suggestive of a more broad based and
more robust recovery (than previously expected) and the market
is really focusing on that."
    Benchmark 10-year note yields gained five basis
points to 0.755%. They remain below an 11-week high of 0.959% on
June 5, when data showed that employers unexpectedly added jobs
in May.
    The yield curve between two-year and 10-year notes
 steepened two basis points to 55 basis points.
    The Federal Reserve also cheered markets on Monday after it
said it would begin buying corporate bonds in the secondary
market.
    The U.S. central bank last week signaled it plans years of
extraordinary support for the economy, with policymakers
projecting the economy to shrink 6.5% in 2020 and the
unemployment rate to be 9.3% at year's end.
    Fed Chair Jerome Powell said on Tuesday that a full U.S.
economic recovery will not occur until Americans are sure that
the novel coronavirus epidemic has been brought under control.

    The Treasury will sell $17 billion in 20-year bonds on
Wednesday.
   
    June 16 Tuesday 3:00PM New York / 1900 GMT
                               Price                  
 US T BONDS SEP0               175-23/32    -1-19/32  
 10YR TNotes SEP0              138-112/256  -0-76/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.17         0.1724    -0.006
 Six-month bills               0.185        0.1877    -0.002
 Two-year note                 99-217/256   0.2032    0.014
 Three-year note               100-10/256   0.2369    0.016
 Five-year note                99-128/256   0.3519    0.026
 Seven-year note               99-136/256   0.5688    0.035
 10-year note                  98-196/256   0.7545    0.052
 20-year bond                  96-188/256   1.3119    0.081
 30-year bond                  93-36/256    1.5369    0.088
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         6.50        -0.25    
 spread                                               
 U.S. 3-year dollar swap         4.50         0.00    
 spread                                               
 U.S. 5-year dollar swap         4.50         0.00    
 spread                                               
 U.S. 10-year dollar swap       -2.00        -0.50    
 spread                                               
 U.S. 30-year dollar swap      -49.75        -0.75    
 spread                                               
                                                      
 
 (Reporting by Karen Brettell; editing by Jonathan Oatis and
Richard Chang)
  
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