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TREASURIES-Yields dip as hopes dim for pre-election stimulus deal

Wed, 14th Oct 2020 20:20

(Recasts, updates yields, adds Mnuchin remarks and analyst
By Karen Pierog
CHICAGO, Oct 14 (Reuters) - U.S. Treasury yields drifted
mostly lower on Wednesday as Treasury Secretary Steve Mnuchin
said a deal to combat the economic fallout from the coronavirus
pandemic appeared unlikely before the Nov. 3 presidential
The benchmark 10-year yield was last down less
than a basis point at 0.7223%.
Speaking at the Milken Institute Global Conference, Mnuchin
said he and Democratic House Speaker Nancy Pelosi were still
"far apart" on some issues and that getting a stimulus deal done
before the election would be difficult.
Ben Jeffery, a strategist at BMO Capital Markets in New
York, said Mnuchin's remarks sent yields lower.
"That was the main event today," he said, adding that yields
so far this week were stuck in a range.
Tom Simons, a money market economist at Jefferies in New
York, said aside from virus vaccine news, "stimulus is probably
the most important news item that the market is trading on."
"But at this point, it's hard to expect that anything is
going to get done this year on that," he said.
Meanwhile, a bigger-than-expected increase in U.S. producer
prices in September did not rattle the market. The Labor
Department reported the producer price index (PPI) for final
demand rose 0.4% last month after advancing 0.3% in August and
was up 0.4% in the 12 months through September.
Economists polled by Reuters had forecast the PPI gaining
0.2% in September and rebounding 0.2% on a year-on-year basis.
The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last down
less than a basis point at 0.139%.
A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, which is viewed as an indicator of
economic expectations, was last at 58 basis points, less than a
basis point lower from Tuesday's close.
October 14 Wednesday 2:53PM New York / 1953 GMT

Price Current Net
Yield % Change
Three-month bills 0.105 0.1065 0.001
Six-month bills 0.115 0.1167 0.000
Two-year note 99-249/256 0.139 -0.002
Three-year note 99-218/256 0.1746 -0.002
Five-year note 99-190/256 0.3024 0.000
Seven-year note 99-32/256 0.5031 -0.002
10-year note 99-20/256 0.7223 -0.005
20-year bond 97-108/256 1.2725 -0.010
30-year bond 97-4/256 1.4994 -0.015

Last (bps) Net
U.S. 2-year dollar swap 9.00 0.25
U.S. 3-year dollar swap 8.50 0.25
U.S. 5-year dollar swap 7.50 0.00
U.S. 10-year dollar swap 3.25 0.00
U.S. 30-year dollar swap -34.00 -0.50

(Reporting by Karen Pierog
Editing by Chizu Nomiyama)

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