June 10, 2020 / 2:01 PM / a month ago

TREASURIES-Yields fall before Fed meeting statement

    By Karen Brettell
    NEW YORK, June 10 (Reuters) - U.S. Treasury yields fell on
Wednesday before the Federal Reserve is expected to signal its
intention to keep interest rates near zero for the next few
years as it attempts to stimulate the U.S. economy.
    The U.S. central bank will publish its economic projections
and investors will also be watching to see if it indicates any
intention to implement yield curve control, which analysts say
is most likely for short-dated notes.
    The U.S. economy entered recession in February as a result
of the coronavirus pandemic, the private economics research
group that acts as the arbiter for determining U.S. business
cycles said on Monday.
    The yield curve has steepened as investors bet that
short-term rates will be held down by the Fed’s low rate policy,
while long-dated debt will be hurt by improving economic
expectations and increasing Treasury supply.
    “Realistically the front-end shouldn’t go anywhere,” said
Justin Lederer, an interest rate strategist at Cantor Fitzgerald
in New York. “I’d be hard pressed to see the Fed raise rates in
the next few years.”
    Two-year Treasury note yields, which are the most
sensitive to Fed policy, fell 2 basis points to 0.191%.
    Benchmark 10-year note yields dipped 3 basis
points to 0.797%.
    The yield curve between two-year and 10-year notes
 flattened to 61 basis points. It reached 72 basis
points on Friday, the steepest since March, after data showed
the U.S. economy unexpectedly added jobs in May.
    The curve between five-year notes and 30-year bonds
 flattened to 119 basis points, after reaching 129
basis points on Friday, the steepest since December 2016.
    U.S. data on Wednesday showed that U.S. consumer prices fell
for a third straight month in May and underlying inflation was
weak
    
     10 Wednesday 9:33AM New York / 1333 GMT
                               Price                  
 US T BONDS SEP0               174-30/32    0-20/32   
 10YR TNotes SEP0              138-12/256   0-84/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.17         0.1729    0.001
 Six-month bills               0.19         0.1928    0.005
 Two-year note                 99-223/256   0.1906    -0.015
 Three-year note               100-6/256    0.2422    -0.021
 Five-year note                99-98/256    0.3755    -0.032
 Seven-year note               99-60/256    0.6124    -0.035
 10-year note                  98-92/256    0.7972    -0.032
 20-year bond                  96-64/256    1.34      -0.024
 30-year bond                  92-144/256   1.5621    -0.022
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         9.00         0.75    
 spread                                               
 U.S. 3-year dollar swap         6.25         1.00    
 spread                                               
 U.S. 5-year dollar swap         5.25         0.75    
 spread                                               
 U.S. 10-year dollar swap       -1.25         0.50    
 spread                                               
 U.S. 30-year dollar swap      -46.25         1.00    
 spread                                               
                                                      
 
 (Editing by Nick Zieminski)
  
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