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TREASURIES-Yields trading in a tight range ahead of debate, jobs data

 (Adds supply comments, table)
    By Kate Duguid
    NEW YORK, Sept 29 (Reuters) - U.S. Treasury yields were
slightly lower on Tuesday, trading within a tight range as
investors held off from making large moves ahead of the
presidential debate scheduled for later in the day and
employment data to be released on Wednesday and Friday.
    The yield on the benchmark 10-year Treasury note
has opened or closed within a range of 0.65% to 0.70% for 15
consecutive sessions, said Andrew Brenner, head of international
fixed income at NatAlliance Securities. The 10-year yield opened
at 0.658% on Tuesday and was last trading lower on the day at
0.641%.
    The long bond was also trading within range,
down 2.1 basis points at 1.402%. The two-year yield
was down 0.2 basis point on the day at 0.129%. The anchored
two-year yield has pulled the yield curve, as measured by the
spread between the two- and 10-year yields,
flatter. 
    A tightening trading range typically indicates that a move
is imminent. "Treasuries are poised to make a move," said
Brenner, "These are wound-up in a narrow range." 
    But the breakout is unlikely to happen during Tuesday's
session. The presidential debate Tuesday evening could
potentially move markets if a poor performance from either
candidate changes the electoral calculus. But the low levels of
implied volatility as indicated by the MOVE index suggest the
market believes the debate will be a non-event. 
    "The current backdrop isn't the setting up for a volatile
session today, even if the narrowing range confines suggest a
breakout is in the offing," wrote Ian Lyngen, head of U.S. rates
strategy at BMO Capital Markets. 
    Republican President Donald Trump and his Democratic rival
Joe Biden will go head-to-head in their first televised debate
on Tuesday evening. With five weeks to go until the Nov. 3
general election, the stakes are high. Trump has recently
refused to commit to a peaceful transfer of power if he loses
the election to Biden, and has said the Supreme Court may have
to declare a winner.
    A light schedule of data releases at the start of the week
has also kept Treasuries within a tight range. A breakout may be
possible if there are major surprises in either the private
payrolls data from ADP to be released on Wednesday morning or
the government's closely-watched monthly payrolls figures
released Friday. 
    Treasuries also have an opportunity to break out of the
current ranges because this week has seen a temporary pause in
government note and bond issuance, said Brenner. The Treasury
Department has issued more than $3 trillion in new debt since
the end of February.  
    
      September 29 Tuesday 12:19PM New York / 1619 GMT
                               Price                  
 US T BONDS DEC/d              177-10/32    15/32     
 10YR TNotes DE/d              139-196/256  5/32      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.0925       0.0941    -0.010
 Six-month bills               0.105        0.1065    -0.001
 Two-year note                 99-254/256   0.1289    -0.002
 Three-year note               99-238/256   0.1488    -0.002
 Five-year note                99-252/256   0.2531    -0.013
 Seven-year note               99-144/256   0.4385    -0.019
 10-year note                  99-212/256   0.643     -0.020
 30-year bond                  99-92/256    1.4013    -0.022
         YIELD CURVE           Last (bps)   Net       
                                            Change    
                                            (bps)     
 10-year vs 2-year yield       51.20        -1.35     
 30-year vs 5-year yield       114.80       -0.75     
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         9.00        -0.25    
 spread                                               
 U.S. 3-year dollar swap         8.75         0.00    
 spread                                               
 U.S. 5-year dollar swap         7.50         0.25    
 spread                                               
 U.S. 10-year dollar swap        3.25         0.00    
 spread                                               
 U.S. 30-year dollar swap      -33.75        -0.75    
 spread                                               
 


 (Reporting by Kate Duguid
Editing by Nick Zieminski)
  
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