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TREASURIES-U.S. yields skyrocket, curve steepens, on Pfizer vaccine news

    * U.S. 10-year, 30-year yields hit highest since March
    * U.S. yield curve steepest since February 2018
    * U.S. TIPS yield hits highest since July
    * U.S. three-year auction shows low indirect bidders

 (Adds new analyst comments, three-year auction results, update
prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 9 (Reuters) - U.S. Treasury yields jumped on
Monday, as news of a successful late-stage vaccine from Pfizer
Inc spurred optimism that the world's largest economy would
emerge from a pandemic-induced recession.
    The benchmark 10-year yield rose to its highest since March,
climbing 14 basis points, its biggest one-day jump since March
as well. 
    The U.S. yield curve, one indication of risk appetite, hit
its steepest level since February 2018, with the spread between
2-year and 10-year notes rising to as high 78.3 basis points.
The spread was last at 77 basis points.    
    Pfizer said on Monday its experimental vaccine was
more than 90% effective in preventing COVID-19, based on initial
data from a large study. 
    The news, potentially a major victory in the fight against a
pandemic that has killed over 1 million people and roiled the
world economy, sparked a sell-off in safe-haven bond markets in
the United States and Europe. 
    "Today's vaccine news provides enormous relief, but the next
story chapters are obscure and harder to time," said Jim Vogel,
senior rates strategist, at FHN Financial in Memphis. "For the
first day of the news, the reaction in the bond market looks
appropriate, while equities appear slightly ahead of
themselves." 
    Bond yields also benefited from some clarity with last
week's U.S. presidential election.
    Two days after clinching victory over Republican President
Donald Trump, Democrat Joe Biden convened a task force on Monday
to devise a blueprint for tackling the coronavirus pandemic in
the United States. His 13-member task force is headed by former
U.S. Surgeon General Vivek Murthy, former Food and Drug
Administration Commissioner David Kessler, and Yale University
healthcare equity expert Marcella Nunez-Smith.
    In afternoon trading, U.S. 10-year Treasury yields were last
up at 0.954%, from 0.82% late on Friday. It earlier
rose to 0.975%, the highest since March. 
    U.S. 30-year yields also touched their highest level since
March of 1.767% and last traded up at 1.749%, from
Friday's 1.598%.
    Tom di Galoma, managing director at Seaport Global Holdings,
said he favored buying the dip in prices in either the 10-year
near 1%, or the 30-year near 1.75%-1.80%.
    He added that 30-year bonds are "severely oversold at the
moment," and expects overseas accounts to buy this "well-timed
dip."
    The yield on U.S. 10-year Treasury Inflation Protected
Securities hit -0.743, the highest since July. It
was last at -0.77%, compared with -0.831% last Friday.
    U.S. break-evens, the bond market's gauge of investors'
inflation outlook, also rose. The yield spread between 10-year
TIPS and 10-year Treasury notes was at 1.725%, the highest level
since late October. 
    On Monday, the U.S. Treasury held a record $54 billion
three-year note auction, with mixed results. The yield was at
0.25%, lower than the expected rate at the bid deadline.

    The bid-to-cover ratio was 2.40, below both the 2.44 last
month and the 2.44 average. It was the lowest since April but
the decline, Action Economics said, was strictly a function of
the increased auction volume.
    Indirect bidders, which include foreign central banks, took
just 38.9% of the total, the weakest since May 2019, said Action
Economics. It was down sharply from 55.7% in October and the
52.2% average.
    
      November 9 Monday 2:50PM New York / 1950 GMT Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.095        0.0963    0.002
 Six-month bills               0.0975       0.0989    -0.002
 Two-year note                 99-227/256   0.1826    0.028
 Three-year note               99-166/256   0.2456    0.043
 Five-year note                99-10/256    0.4456    0.083
 Seven-year note               98-152/256   0.707     0.111
 10-year note                  96-236/256   0.9559    0.136
 20-year bond                  93-76/256    1.5189    0.152
 30-year bond                  91-84/256    1.75      0.152
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         7.25        -1.00    
 spread                                               
 U.S. 3-year dollar swap         6.50        -1.00    
 spread                                               
 U.S. 5-year dollar swap         5.25        -0.75    
 spread                                               
 U.S. 10-year dollar swap        1.00        -0.75    
 spread                                               
 U.S. 30-year dollar swap      -34.25        -1.25    
 spread (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting
Karen Pierog in Chicago; Editing by Nick Zieminski and
Bernadette Baum)
  
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