(Adds three-year auction results, updates prices) By Karen Brettell NEW YORK, Sept 8 (Reuters) - U.S. Treasury yields fell on Tuesday as tumbling stocks boosted demand for the safe haven U.S. debt, and before the United States government will sell $35 billion in 10-year notes on Wednesday. U.S. stocks dropped for a third straight session as a sell-off in high-flying technology names continued from the prior week, while Tesla was poised for its worst day in nearly six months after the stock was passed over for inclusion in the S&P 500. That boosted demand for Treasuries, even though heavy supply this week is expected to weigh on the bonds. “We have equity market weakness ... so it’s probably neutralizing the set up (for the auctions),” said Tom Simons, a money market economist at Jefferies in New York. Benchmark 10-year note yields fell four basis points to 0.685%. The yield curve between two-year and 10-year notes flattened three basis points to 54 basis points. The Treasury Department sold a record $50 billion in three-year notes on Tuesday to slightly soft demand, though the high yield of 0.170% was a historic low. Demand for $35 billion in 10-year notes on Wednesday and $23 billion in 30-year bonds on Thursday is seen as a larger concern, after the government saw tepid interest in record large sales of these issues in August. “Those auctions were pretty sloppy, even after a pretty significant concession coming into them,” said Simons. “The big sizes seem to be more significant and more difficult for the market to take down in the long end of the curve.” The U.S. has been increasing Treasury supply across the curve as it pays for stimulus meant to blunt the economic impact of the novel coronavirus. Investors will be watching to see if the U.S. Congress is likely to pass additional spending as lawmakers begin returning to Washington this week. September 8 Tuesday 3:00PM New York / 1900 GMT Price US T BONDS DEC0 176-8/32 0-28/32 10YR TNotes DEC0 139-100/256 0-92/256 Price Current Net Yield % Change (bps) Three-month bills 0.1175 0.1195 0.007 Six-month bills 0.1275 0.1294 0.005 Two-year note 99-248/256 0.1408 -0.010 Three-year note 99-224/256 0.1678 -0.016 Five-year note 99-228/256 0.2722 -0.033 Seven-year note 100-52/256 0.4704 -0.039 10-year note 99-108/256 0.6853 -0.038 20-year bond 98-104/256 1.2153 -0.043 30-year bond 98-208/256 1.4239 -0.047 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.50 0.25 spread U.S. 3-year dollar swap 7.00 0.00 spread U.S. 5-year dollar swap 6.00 0.00 spread U.S. 10-year dollar swap 0.00 -0.25 spread U.S. 30-year dollar swap -38.25 0.00 spread (Editing by Nick Zieminski)
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