July 17, 2020 / 1:48 PM / a month ago

TREASURIES-Yields edge higher but hold in tight range as investors weigh COVID risks

    By Karen Brettell
    NEW YORK, July 17 (Reuters) - U.S. Treasury yields inched
higher on Friday as investors weighed the prospect of new
economic damage from shutdowns meant to stem the spread of
COVID-19 against the possibility that the worst has passed.
    The United States shattered its daily record for coronavirus
infections on Thursday, reporting more than 77,000 new cases as
the number of deaths in a 24-hour period rose by nearly 1,000,
according to a Reuters tally.
    But risk appetite remains strong and stocks opened higher on
optimism about an economic recovery.
    Treasuries are “taking cues from COVID headlines and
equities, but its not exactly one for one,” said Justin Lederer,
an interest rate strategist at Cantor Fitzgerald in New York.
“On the backups there’s buyers, but we’re not really breaking
out of any ranges here.”
    Benchmark 10-year notes rose less than a basis
point to 0.615%. 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
 was little changed on the day at 47 basis points.
    Data on Friday showed that U.S. homebuilding surged in June
amid reports of rising demand for housing in lower density areas
as companies allow employees flexibility to work from home
because of the COVID-19 pandemic.
    The Treasury Department will sell $17 billion in 20-year
bonds and $14 billion in 10-year Treasury-Inflation Protected
Securities (TIPS) next week.
    TIPS have rallied for the past few months on expectations
that stimulus from the United States government and Federal
Reserve will spur inflation.
    Yields on 10-year TIPS fell to minus 0.82% on
Friday. They have been down from around minus 0.40% in early
June.
    
       July 17 Friday 9:32AM New York / 1332 GMT
                               Price                  
 US T BONDS SEP0               180-3/32     -0-4/32   
 10YR TNotes SEP0              139-112/256  -0-12/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.11         0.1116    -0.002
 Six-month bills               0.1325       0.1344    0.002
 Two-year note                 99-245/256   0.1471    0.000
 Three-year note               99-220/256   0.1722    0.000
 Five-year note                99-222/256   0.2771    0.002
 Seven-year note               100-72/256   0.4588    0.002
 10-year note                  100-24/256   0.6151    0.003
 20-year bond                  100-172/256  1.0872    0.008
 30-year bond                  98-144/256   1.3084    0.007
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         7.50         0.25    
 spread                                               
 U.S. 3-year dollar swap         5.75         0.25    
 spread                                               
 U.S. 5-year dollar swap         4.00         0.25    
 spread                                               
 U.S. 10-year dollar swap       -1.75         0.25    
 spread                                               
 U.S. 30-year dollar swap      -46.00         0.25    
 spread                                               
                                                      
 


 (Reporting by Karen Brettell; editing by Jonathan Oatis)
  
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