Company News

TREASURIES-Yields slip ahead of U.S. election, Fed meeting

 (Updates yields, adds analyst comments and Treasury quarterly
borrowing estimate)
    By Karen Pierog
    CHICAGO, Nov 2 (Reuters) - U.S. Treasury yields mostly
drifted lower on Monday as investors braced for an action-packed
week headlined by Tuesday's presidential election.
   The benchmark 10-year yield was last down less
than a basis point at 0.8502%.
    "It could be easily looked at as the calm before the storm,"
said Justin Hoogendoorn, head of fixed income strategy at Piper
Sandler in Chicago. 
    Democrat Joe Biden is ahead in national opinion polls, but
races are tight in battleground states that could tip the
election to Republican President Donald Trump.

    "A lot is going to depend on the outcome of the election and
we might not get that outcome tomorrow night," said Kim Rupert,
managing director of global fixed income analysis at Action
Economics in San Francisco.
    Both candidates have said they intend to push for more
stimulus measures to combat the economic fallout from the
coronavirus pandemic.
    "If you get a blue wave, there could be a much larger
stimulus package that in general should be good for the economy,
but not necessarily great for Treasuries," Hoogendoorn said,
pointing to the market's already big supply increase.
    The U.S. Treasury announced on Monday it expected to borrow
$617 billion in privately held net marketable debt in the fourth
quarter, assuming a year-end cash balance of $800 billion.

    Post election, the Federal Reserve will begin a two-day
policy-making meeting on Wednesday as the economy struggles with
still big unemployment amid a rise in coronavirus cases.

    "I don't think the FOMC is going to be anything. I think
they want to stay clear of rocking any kind of boat," Rupert
said, referring to the Federal Open Market Committee.
    Friday will bring the October jobs report. The U.S.
unemployment rate, which spiked to 14.7% in April, fell to 7.9%
in September from 8.4% in August.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last up less
than a basis point at 0.1584%.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, which is viewed as an indicator of
economic expectations, was last at 68.90 basis points, 2.9 basis
points lower from Friday's close.
   November 2 Monday 3:15PM New York / 2115 GMT Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.09         0.0915    -0.002
 Six-month bills               0.1          0.1014    -0.003
 Two-year note                 99-239/256   0.1584    0.006
 Three-year note               99-200/256   0.1994    0.005
 Five-year note                99-96/256    0.3765    -0.005
 Seven-year note               99-32/256    0.6281    -0.005
 10-year note                  97-228/256   0.8502    -0.009
 20-year bond                  95-80/256    1.397     -0.011
 30-year bond                  94-16/256    1.6273    -0.009
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         7.75        -0.75    
 U.S. 3-year dollar swap         7.50        -1.25    
 U.S. 5-year dollar swap         5.50        -1.00    
 U.S. 10-year dollar swap        1.00        -1.25    
 U.S. 30-year dollar swap      -36.25        -1.75    
 spread (Reporting by Karen Pierog; Editing by Bernadette Baum and
Richard Chang)