May 20, 2020 / 2:00 PM / 12 days ago

TREASURIES-Yields steady as market awaits 20-year bond auction

    CHICAGO, May 20 (Reuters) - U.S. Treasury yields were little
changed on Wednesday ahead of the first auction in decades of
20-year bonds and the release of minutes from the Federal
Reserve's April meeting.
    The benchmark 10-year yield was last down less
than a basis point at 0.7094%.
    Treasury will offer $20 billion in 20-year bonds and will
sell a total of $54 billion over three months. The last 20-year
was sold in 1986.
    "I don't think we'll have a clear picture of market
acceptance and its influence on the yield curve probably until
about the third auction when we get to July," said Jim Vogel, an
interest rate strategist at FHN Financial in Memphis, Tennessee.
    He added that if the 20-year bond clears through 1.20% that
could take some pressure off the 10-year note and lead to a
flatter curve between the five and 10-year notes.
    Also on Wednesday, the Fed will release minutes from its
April meeting. Vogel said the focus will be on details and
economic guidance from staff. 
    "The minutes have included more staff studies and early
thinking than they have in the past so you get a feel for what
they're going to discuss out of the minutes as well," he said.
   The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last down
less than a basis point at 0.1713%.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, seen as an indicator of economic
expectations, was at 53.16 basis points, about 4 basis points
higher than on Tuesday's close.
   Bids submitted in a Wednesday morning overnight repurchase
agreement (repo) operation totaled $7 billion, according to the
New York Federal Reserve, which said it accepted all the bids.
  May 20 Wednesday 8:35AM New York / 1335 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1225       0.1246    -0.004
 Six-month bills               0.1525       0.1547    0.000
 Two-year note                 99-233/256   0.1713    -0.002
 Three-year note               99-184/256   0.2196    0.000
 Five-year note                100-34/256   0.3479    0.000
 Seven-year note               99-188/256   0.539     -0.002
 10-year note                  99-48/256    0.7094    -0.002
 30-year bond                  95-120/256   1.4365    0.000
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         8.25        -0.50    
 spread                                               
 U.S. 3-year dollar swap         5.25        -0.25    
 spread                                               
 U.S. 5-year dollar swap         3.00        -0.25    
 spread                                               
 U.S. 10-year dollar swap       -2.75        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -48.50        -0.25    
 spread                                               
 
 (By Karen Pierog in Chicago; Editing by David Gregorio)
  
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