February 3, 2020 / 2:23 PM / 16 days ago

TREASURIES-Yields rise as traders watch coronavirus response

    By Ross Kerber
    BOSTON, Feb 3 (Reuters) - U.S. Treasury yields ticked up on
Monday as traders took stock of the international response to
the coronavirus epidemic.
    The benchmark 10-year yield was up 1.7 basis
points in morning trading at 1.5357%.
    Analysts said the moves showed traders accepting a bit more
risk after Chinese markets plunged on Monday, the first trading
day after an extended New Year break, and China accused the U.S.
of whipping up panic.
    "Treasury markets are consolidating," said John Herrmann,
director of U.S. rates strategy for MUFG Securities.
    In late December, 10-year yields were approaching 2% and the
sharp fall since then has investors taking a breath, waiting to
see the long-term impact of the virus and tracking other issues
like Boeing Co's aircraft production halt, he said.
    "At this point we have priced-in a lot of bad news,"
Herrmann said.
    Monday's moves in U.S. Treasuries mirrored steps in Europe
where bond yields inched up.
    Fears surrounding the spread of coronavirus, which has been
declared a global emergency, had led the S&P 500 and the
Dow Jones Industrials to record on Friday their worst
weekly losses in at least five months.
    The death toll in China from the newly identified virus,
which emerged in Wuhan, capital of the central province of
Hubei, rose to 361 as of Sunday, up 57 from the previous day,
the National Health Commission said.
    The World Health Organization (WHO) last week declared the
flu-like virus a global emergency and it has since spread to 23
other countries and regions. It has advised against trade and
travel curbs however.              
    The two-year  U.S. Treasury yield, which
typically moves in step with interest rate expectations, was  up
2.2 basis points at 1.351% in morning trading.

  February 3 Monday 9:13AM New York / 1413 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.5325       1.5638    0.010
 Six-month bills               1.52         1.557     0.015
 Two-year note                 100-12/256   1.351     0.022
 Three-year note               100-122/256  1.3343    0.027
 Five-year note                100-28/256   1.3522    0.027
 Seven-year note               100-76/256   1.4552    0.021
 10-year note                  101-240/256  1.5357    0.017
 30-year bond                  107-248/256  2.0176    0.006
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         5.75        -0.50    
 spread                                               
 U.S. 3-year dollar swap         2.00        -0.50    
 spread                                               
 U.S. 5-year dollar swap         0.00        -0.25    
 spread                                               
 U.S. 10-year dollar swap       -5.50         0.00    
 spread                                               
 U.S. 30-year dollar swap      -33.25         0.25    
 spread                                               
 

 (Editing by Nick Zieminski)
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