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TREASURIES-Longer-term yields rise with stock gains

Fri, 31st Jul 2020 15:12

By Ross Kerber
July 31 (Reuters) - Longer-term U.S. Treasury yields rose on
Friday as traders moved into stocks, but caution held back
shorter-term rates and steepened the yield curve.
The benchmark 10-year yield was up 2.1 basis
points at 0.5625% in morning trading.
The gap between yields on two- and 10-year Treasury notes,
seen as an indicator of economic expectations, was
at 44 basis points, about a basis point above Thursday's close
and well above the 40 basis point level it touched early Friday
morning.
The risk-on movement came as stock indexes opened higher
based on strong earnings from top technology
companies.
But the two-year U.S. Treasury yield, which
typically moves in step with interest rate expectations, was
almost unchanged at 0.1191% and remained close to its all-time
low of 0.105% reached on May 8.
The economy as a whole is unlikely to improve until public
health issues stemming from the COVID-19 pandemic are resolved,
said Raymond James market strategist Ellis Phifer. Early signs
of an economic comeback proved premature as virus cases have
continued rise and kept people at home.
"That's bad for the economy since we're consumer driven,"
Phifer said.
The Commerce Department said on Friday that consumer
spending, which accounts for more than two-thirds of U.S.
economic activity, rose 5.6% last month after a record 8.5% jump
in May as more businesses reopened.
The data was included in Thursday's advance gross domestic
product report for the second quarter, which showed the economy
shrinking at a record 32.9% annualized rate as consumer spending
tanked at a historic 34.6% pace.
The United States leads the world in COVID-related
fatalities with more than 150,000 in five months.
In Washington negotiations over another coronavirus relief
bill continued and the No. 2 Democrat in the U.S. House of
Representatives said a federal jobless benefit was set to expire
on Friday with no sign of a deal.

July 31 Friday 9:53AM New York / 1353 GMT



Price Current Net
Yield % Change
(bps)
Three-month bills 0.0925 0.0938 -0.002
Six-month bills 0.1 0.1017 -0.002
Two-year note 100-3/256 0.1191 -0.002
DThree-year note 99-250/256 0.133 -0.003
Five-year note 100-16/256 0.2374 0.007
Seven-year note 99-188/256 0.4136 0.013
10-year note 100-152/256 0.5625 0.021
20-year bond 102-52/256 1.0019 0.028
30-year bond 100-124/256 1.2305 0.033

DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 7.00 0.50
spread
U.S. 3-year dollar swap 6.00 0.50
spread
U.S. 5-year dollar swap 4.00 0.25
spread
U.S. 10-year dollar swap -1.00 0.00
spread
U.S. 30-year dollar swap -42.75 -1.00
spread




(Reporting by Ross Kerber in Boston
Editing by Nick Zieminski)

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