May 5, 2020 / 7:20 PM / a month ago

TREASURIES-Yields rise on improving risk appetite, looming supply

 (New throughout, updates prices, market activity and comments)
    By Karen Brettell
    NEW YORK, May 5 (Reuters) - U.S. Treasury yields rose as
plans to reopen major economies boosted risk appetite on
Tuesday, a day after the Treasury Department announced it would
borrow a record amount of almost $3 trillion this quarter.
    Italy and the United States were among a slew of countries
tentatively easing coronavirus lockdowns on Monday to revive
economies as global deaths surpassed a quarter of a million.

    "Whether its short-term or long-term hope, you're starting
to see some economies reopen," said Justin Lederer, an interest
rate strategist at Cantor Fitzgerald in New York.
    Longer-dated debt also underperformed on Tuesday, a day
before the Treasury was scheduled to give details of next week’s
auctions of three-, 10- and 30-year debt, which are likely to be
increased in size.
    "I wouldn't be surprised if we saw a little bit of a backup
into the refunding next week," said Lederer. "Expectations will
be for higher coupon issuance and a 20-year."
    The U.S. Treasury Department on Monday said it plans to
borrow nearly $3 trillion in the second quarter - more than five
times larger than the previous record - as the federal
government spends at a frantic pace to mitigate the impact of
the coronavirus outbreak on the economy.
    Additional details of Treasury's quarterly refunding will be
announced at 8:30 a.m EDT (1230 GMT) on Wednesday. In February,
Treasury said it would announce details of a planned new 20-year
bond in May.
    Benchmark 10-year yields rose two basis points
to 0.654%.
    The yield curve between two-year and 10-year notes
 steepened two basis points to 47 basis points.
    Thirty-year bond yields rose three basis points
to 1.327%.
    Heavy corporate debt supply also weighed on the Treasury
market on Tuesday.
    
      May 5 Tuesday 3:02PM New York / 1902 GMT
                               Price                  
 US T BONDS JUN0               180-11/32    -0-12/32  
 10YR TNotes JUN0              138-228/256  -0-20/25  
                                            6         
                               Price        Current   Net Change
                                            Yield %   (bps)
 Three-month bills             0.12         0.122     0.008
 Six-month bills               0.1425       0.145     0.008
 Two-year note                 99-225/256   0.1862    0.004
 Three-year note               100-4/256    0.2447    0.008
 Five-year note                100-12/256   0.3655    0.007
 Seven-year note               99-196/256   0.5342    0.011
 10-year note                  108          0.654     0.017
 30-year bond                  116-128/256  1.3273    0.030
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        12.25        -0.25    
 spread                                               
 U.S. 3-year dollar swap         7.50        -0.25    
 spread                                               
 U.S. 5-year dollar swap         4.00         0.00    
 spread                                               
 U.S. 10-year dollar swap       -0.50         0.25    
 spread                                               
 U.S. 30-year dollar swap      -47.25         0.25    
 spread                                               
 
 (Reporting by Karen Brettell
Editing by Paul Simao and David Gregorio)
  
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