July 16, 2020 / 2:02 PM / 22 days ago

TREASURIES-Yields fall as COVID-19 spread weighs on risk sentiment

    By Karen Brettell
    NEW YORK, July 16 (Reuters) - U.S. Treasury yields fell on
Thursday as the rapid spread of coronavirus cases across some
American states weighed on risk sentiment, even as data showed
U.S. economic improvement.
    A surge in COVID-19 infections in numerous U.S. Southern
states has raised concerns that new business shutdowns meant to
stem the spread of the virus will cause fresh economic damage.
    “The next two months are really critical, can the economy
survive this surge in COVID cases in the Sunbelt, is that surge
going to manifest itself elsewhere too,” said Tom Simons, a
money market economist at Jefferies in New York.
    “The risk of owning some protection is relatively low and I
think that’s generally the bias. You want to have some
Treasuries no matter what,” Simons added.
    Benchmark 10-year notes fell two basis points to
0.614%. They have held in a tight range from 0.569% to 0.784%
since mid-June.
    The yield curve between two-year and 10-year notes
 flattened one basis point to 46 basis points.
    Bonds rallied even after U.S. data showed recent improvement
in the economy.
    U.S. retail sales increased by 7.5% in June, which was more
than economists expected. The Labor Department showed 1.30
million people filed for state unemployment benefits during the
week ending July 11, slightly down from 1.31 million in the
prior period.
    A gauge of manufacturing activity in the U.S. Mid-Atlantic
region also jumped in July.
    Bonds had earlier gained after data in China showed
unexpected weakness in domestic consumption.
    
    July 16 Thursday 9:49AM New York / 1349 GMT
                               Price                  
 US T BONDS SEP0               180-5/32     0-14/32   
 10YR TNotes SEP0              139-116/256  0-28/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1275       0.1293    -0.008
 Six-month bills               0.1325       0.1344    -0.008
 Two-year note                 99-243/256   0.151     -0.004
 Three-year note               99-220/256   0.1721    -0.008
 Five-year note                99-220/256   0.2786    -0.006
 Seven-year note               100-72/256   0.4588    -0.011
 10-year note                  100-28/256   0.6135    -0.016
 20-year bond                  100-184/256  1.0846    -0.021
 30-year bond                  98-140/256   1.309     -0.022
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         6.75        -0.25    
 spread                                               
 U.S. 3-year dollar swap         5.25         0.00    
 spread                                               
 U.S. 5-year dollar swap         3.75         0.00    
 spread                                               
 U.S. 10-year dollar swap       -2.00         0.25    
 spread                                               
 U.S. 30-year dollar swap      -46.50         0.50    
 spread                                               
                                                      
 
 (Reporting by Karen Brettell; editing by Jonathan Oatis)
  
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