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TREASURIES-Traders ready for note auctions, U.S. Fed guidance

Mon, 24th Aug 2020 19:39

(Updates market activity, adds analyst comment)
By Ross Kerber
Aug 24 (Reuters) - Stable U.S. Treasury yields on Monday
showed traders preparing for a week that will include of a
barrage of new supply and possible insight from the Federal
Reserve on how it will support the economy.
The benchmark 10-year yield was up less than a
basis point at 0.6493% in afternoon trading.
The yield was roughly in the middle of the range where the
10-year note has traded since late March and indicated investors
were looking ahead to auctions of $148 billion worth of 2-year,
5-year and 7-year notes starting on Tuesday said Ben Jeffery,
BMO Capital Markets rates strategist.
Remarks from Federal Reserve Chairman Jerome Powell
scheduled for Thursday could shed light on the U.S. central
bank's next steps to promote an economic recovery.
"People are probably just squaring positions ahead of the
more consequential events later this week," Jeffery said.
Jack McIntyre, fixed income portfolio manager for Brandywine
Global Investment Management, said despite the upcoming
auctions, U.S. Treasury yields will likely stay close to current
levels until the Fed provides more clarity about its intentions.
"My view is that the supply doesn't change the trend in the
bond market. I think yields are going to be rangebound," he
U.S. Republicans formally backed President Donald Trump's
re-election bid on the first of four days of a scaled-back party
convention in Charlotte, North Carolina. Party members are
meeting amid a coronavirus pandemic that has killed more than
176,000 Americans, erased millions of jobs and eroded the
president's standing among voters.
Wall Street gained on Monday, setting the S&P 500 and the
Nasdaq on track for record closing highs as optimism over
potential medical advances to fight the pandemic helped keep
investors in a buying mood.
A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, seen as an indicator of economic
expectations, was at 49 basis points, a basis point above
Friday's close and well above its recent low of 33 basis points
reached on July 24.
The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was up less than
a basis point at 0.1554% in afternoon trading.

August 24 Monday 2:22PM New York / 1822 GMT

Price Current Net
Yield % Change
Three-month bills 0.0925 0.0938 -0.002
Six-month bills 0.115 0.1167 -0.002
Two-year note 99-241/256 0.1554 0.008
Three-year note 99-216/256 0.1777 0.011
Five-year note 99-218/256 0.2803 0.008
Seven-year note 99-104/256 0.4621 0.007
10-year note 99-196/256 0.6493 0.009
20-year bond 99-204/256 1.1364 0.005
30-year bond 100-140/256 1.3527 0.000

Last (bps) Net
U.S. 2-year dollar swap 6.50 -0.75
U.S. 3-year dollar swap 5.75 -0.75
U.S. 5-year dollar swap 4.25 -0.75
U.S. 10-year dollar swap -1.25 -1.00
U.S. 30-year dollar swap -38.25 -0.25

(Reporting by Ross Kerber in Boston; Editing by Will Dunham and
Leslie Adler)

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