June 17, 2020 / 1:53 PM / 16 days ago

TREASURIES-Yields lower as coronavirus cases rise in Beijing, some U.S. states

    By Karen Brettell
    NEW YORK, June 17 (Reuters) - U.S. Treasury yields edged
lower on Wednesday as new outbreaks of the novel coronavirus and
rising geopolitical tensions in Asia boosted demand for the safe
haven debt.
    Benchmark 10-year yields have fallen from 11-week highs
reached on June 5 when data showed that employers unexpectedly
added jobs in May.
    Optimism over a quick economic recovery has been tempered by
an increase in global cases of the coronavirus, with a new
outbreak in Beijing and a rising tide of cases in U.S. states
that are reopening their economies.
    Bonds also gained a safety bid overnight as tensions between
North Korea and South Korea increased. There have also been
clashes between Indian and Chinese troops at a disputed border
site.
    “We had a run up (in price) last night on flight to
quality,” said Tom di Galoma, a managing director at Seaport
Global Holdings in New York.
    Benchmark 10-year notes yields were last 0.740%,
after earlier falling to 0.725%. The yield curve between
two-year and 10-year notes was little changed at
55 basis points.
    The Treasury is due to sell $17 billion in 20-year bonds on
Wednesday, the second auction since the maturity was
reintroduced last month. Yields on the 20-year bonds
were last 1.297%, and are down from a high of 1.541% on June 5.
    The 20-year bonds are priced attractively relative to
10-year notes and 30-year bonds, which should help demand at the
auction, said di Galoma.
    Federal Reserve Chairman Jerome Powell will testify before
Congress for a second day on Wednesday, after saying on Tuesday
that a full U.S. economic recovery will not occur until
Americans are sure the novel coronavirus epidemic has been
brought under control.
    Data on Thursday showed that U.S. homebuilding increased
less than expected in May, leaving the bulk of the prior months'
declines intact and pointing to a slow housing market recovery
from the COVID-19 crisis.
      June 17 Wednesday 9:33AM New York / 1333 GMT
                               Price                  
 US T BONDS SEP0               176          0-10/32   
 10YR TNotes SEP0              138-144/256  0-32/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.17         0.1724    0.000
 Six-month bills               0.185        0.1877    0.000
 Two-year note                 99-221/256   0.1952    -0.008
 Three-year note               100-22/256   0.2212    -0.016
 Five-year note                99-146/256   0.3376    -0.012
 Seven-year note               99-160/256   0.5551    -0.014
 10-year note                  98-232/256   0.7397    -0.014
 20-year bond                  96-252/256   1.2974    -0.015
 30-year bond                  93-92/256    1.5274    -0.011
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         6.50         0.00    
 spread                                               
 U.S. 3-year dollar swap         4.75         0.25    
 spread                                               
 U.S. 5-year dollar swap         4.25        -0.25    
 spread                                               
 U.S. 10-year dollar swap       -2.75        -0.75    
 spread                                               
 U.S. 30-year dollar swap      -51.25        -1.50    
 spread                                               
                                                      
 

    

 (Reporting by Karen Brettell; Editing by Bernadette Baum)
  
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