TREASURIES-Yields edge lower as stocks stay choppy

By Chuck Mikolajczak
Sept 22 (Reuters) - U.S. Treasury yields edged lower on
Tuesday, as equities remained choppy after their recent run
lower ahead of comments from U.S. Federal Reserve Chair Powell
before the House Financial Services Committee.
Yields on the 10-year U.S. Treasury have been falling over
the last several sessions as stocks have come under pressure,
with the S&P 500 down 3.5% over the prior four sessions on
concerns about rising coronavirus cases potentially leading to
fresh lockdowns, election uncertainty and Washington gridlock
stalling a new round of coronavirus relief.
With equities under pressure, investors often move into
defensive plays such as Treasuries, driving rates lower. Still,
the yield on the 10-year remained within the 6-basis-point range
it has held since the Fed's most recent policy statement on
Sept. 16.
"Overall, we are seeing fixed income markets exude a great
deal of calmness and a calm approach in contrast to what we are
seeing in equities," said Bill Merz, head of fixed income
research at U.S. Bank Wealth Management in Minneapolis.
"That is during a time when equity markets have experienced
significant volatility, significant downside, and 10-year yields
have done virtually nothing."
The yield on 10-year Treasury notes was down 0.5
basis point at 0.666 percent.
Powell is set to speak at 10:30 a.m. EDT (1430 GMT) on
coronavirus aid. In a statement on Monday, he said the central
bank remains committed to using all the tools at its disposal to
help the U.S. economy recover from the pandemic.
Treasuries had little reaction to economic data which showed
U.S. home sales surged to their highest level in nearly 14 years
in August, as the housing market remains a strength of the
economy.
The two-year US2YT=RR U.S. Treasury yield, which typically
moves in step with interest rate expectations was
down 0.2 basis point at 0.135 percent.
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 52.8 basis points, rebounding from a
two-week low hit on Monday.


September 22 Tuesday 10:18AM New York / 1418 GMT
Price
US T BONDS DEC0 176-22/32 0-5/32
10YR TNotes DEC0 139-152/256 0-8/256
Price Current Net
Yield % Change
(bps)
Three-month bills 0.1 0.1014 -0.003
Six-month bills 0.1075 0.1091 0.000
Two-year note 99-251/256 0.1351 -0.002
Three-year note 99-236/256 0.1513 -0.006
Five-year note 99-240/256 0.2627 -0.005
Seven-year note 100-84/256 0.4519 -0.002
10-year note 99-156/256 0.6658 -0.005
20-year bond 98-188/256 1.1967 -0.011
30-year bond 99-28/256 1.4116 -0.014

DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 8.00 0.25
spread
U.S. 3-year dollar swap 7.25 0.25
spread
U.S. 5-year dollar swap 6.00 0.00
spread
U.S. 10-year dollar swap 0.75 0.25
spread
U.S. 30-year dollar swap -36.50 0.25
spread


(Reporting by Chuck Mikolajczak; editing by Jonathan Oatis)