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TREASURIES-U.S. yields tumble amid surge in COVID-19 cases

    * U.S. yield curve flattens after steepening the last few
sessions
    * U.S. consumer prices unchanged in October
    * U.S. 30-year bond auction shows solid results

 (Adds new comment, U.S. 30-year auction outcome, updates
prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 12 (Reuters) - U.S. Treasury yields sank on
Thursday, weighed down by the persistent rise in coronavirus
cases around the world and data showing inflation remained
benign in the world's largest economy.
    The U.S. yield curve, viewed in part as a gauge of risk
appetite, also flattened on Thursday, after steepening the last
few sessions on positive COVID-19 vaccine news from Pfizer Inc
 early this week. Analysts said investors are realizing
that distributing the vaccine to the world would take time.
    Demand at the $27 billion U.S. 30-year bond auction on
Thursday was decent, analysts said, although the yield of 1.68%
exceeded market expectations at the bid deadline. The
bid-to-cover ratio was 2.29, slightly higher than the August
refunding but the same number as the October reopening. 
    Indirect bidders, which include foreign central banks, took
61.9% of the total, a little better than the 59.8% takedown at
the August refunding.
    "The 30-year auction was solid," said Jim Vogel, senior
rates strategist, at FHN Financial in Memphis. "We had good
participation in the face of a 9 basis-point rally in the
30-year and therefore we have kept the price gains in Treasuries
today."
    Thursday's data on U.S. consumer prices, which were
unexpectedly unchanged in October, kept yields lower. Excluding
the volatile food and energy components, CPI was also flat after
rising 0.2% the prior month.
    In afternoon trading, U.S. benchmark 10-year yields were
down at 0.884%, from 0.989% late on Tuesday. Bond
markets were closed on Wednesday for Veterans Day. 
    Stan Shipley, fixed income strategist at Evercore ISI in New
York, said the 1% yield on the 10-year note is a big
psychological level. 
    "But it's going to take a little bit of effort to get
through that 1%, and today's CPI number didn't help. Rising
coronavirus cases every day won't help either," he added.
    On Thursday, the U.S. Centers for Disease Control and
Prevention (CDC) reported 10,314,254 cases, up 143,408 from its
previous count, and said the number of deaths had risen by 1,479
to 241,069.
    U.S. 30-year yields fell to 1.645% from
Tuesday's 1.76%.
    On the front end of the curve, U.S. two-year yields slipped
to 0.176% from 0.185% on Tuesday.
    The U.S. yield curve, meanwhile, flattened, with the spread
between the two-year and 10-year narrowing to 70 basis points
.
    U.S. President-elect Joe Biden moved ahead with planning his
new administration on Thursday as his fellow Democrats in
Congress blasted Republican "shenanigans" challenging Donald
Trump's election loss.
    The post-election uncertainty has weighed on bond investors
as well and kept a lid on U.S. rates.
    In Thursday's research note about the U.S. election outcome,
Fitch Ratings said it expected a "noisy but ultimately orderly"
shift of power to the Biden administration. The ratings agency
said it also expected Republicans to keep control of the U.S.
Senate, noting that a divided government could pose a "serious
obstacle to legislation that would address structural issues."
    
      November 12 Thursday 3:25PM New York / 2025 GMT Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.09         0.0913    -0.005
 Six-month bills               0.1          0.1014    -0.003
 Two-year note                 99-230/256   0.1768    -0.008
 Three-year note               100-14/256   0.2317    -0.026
 Five-year note                99-72/256    0.3964    -0.064
 Seven-year note               99-16/256    0.6378    -0.088
 10-year note                  99-240/256   0.8815    -0.108
 20-year bond                  95-12/256    1.4132    -0.118
 30-year bond                  93-172/256   1.6448    -0.115
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         8.25         0.50    
 spread                                               
 U.S. 3-year dollar swap         7.25         1.25    
 spread                                               
 U.S. 5-year dollar swap         5.50         0.50    
 spread                                               
 U.S. 10-year dollar swap       -1.00        -1.75    
 spread                                               
 U.S. 30-year dollar swap      -34.50         0.00    
 spread (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Ross Kerber in Boston; Editing by Chizu Nomiyama, Jonathan Oatis
and Richard Chang)
  
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