TREASURIES-Yields fall on coronavirus fears, 10-year note below 1.5%

By Ross Kerber
BOSTON, Feb 21 (Reuters) - U.S. Treasury yields were down on
Friday as mounting concerns about the economic impact of the
coronavirus epidemic drove investors into safe-haven assets.
The benchmark 10-year yield was down 6.9 basis
points in morning trade at 1.4561%.
It was the first time the note yielded less than 1.5% since
early September. Analysts said the breach of the barrier showed
investors' growing concern as cases of the virus mount beyond
China, including in South Korea and Japan.
"Everybody is trying to figure out how bad this will be,"
said Jon Hill, U.S. rates strategist for BMO Capital Markets. He
noted how the move below 1.5% first occurred during European
trading hours and corresponded with negative coronavirus news,
indicating traders were focused on the epidemic rather than
economic data.
Yields took another step down after a survey of purchasing
managers on Friday morning showed U.S. business activity in both
the manufacturing and services sectors stalled in February as
companies grew increasingly concerned about the
coronavirus.
U.S. stock indexes opened lower on Friday as investors
scrambled for safer assets such as gold and government bonds.
Traders moving away from riskier assets headed into
the weekend also likely also drove down yields, as they have in
previous Friday sessions, Hill said.
Beijing reported an uptick in cases of coronavirus on Friday
and South Korea reported 100 new cases that doubled its
infections.
In China authorities reported 234 infections among prisoners
outside Hubei province, contributing to a jump in reported cases
beyond the epicenter. The report ended 16 straight days of
declines in new mainland cases excluding that province, where
the virus first emerged in December in its now locked-down
capital, Wuhan.
Although daily updates on the spread of the virus have kept
investors on edge, hopes that central banks across the globe
will take measures to counter any slowdown have cushioned global
stocks and kept the benchmark S&P 500 near all-time
highs.
A number of U.S. Federal Reserve officials are set to speak
at a Friday conference. Speaking on CNBC, Atlanta Federal
Reserve Bank President Raphael Bostic said the U.S. economy is
set to grow at a 2.00% to 2.25% annualized rate this year and
any disruption to activity from the coronavirus outbreak will be
short-lived.
The two-year U.S. Treasury yield, which
typically moves in step with interest rate expectations, was
down 5.3 basis points at 1.342% in morning trading.

February 21 Friday 9:50AM New York / 1450 GMT



Price Current Net
Yield % Change
(bps)
Three-month bills 1.5375 1.569 -0.010
Six-month bills 1.5 1.5364 -0.011
Two-year note 100-16/256 1.342 -0.053
Three-year note 100-52/256 1.3051 -0.057
Five-year note 100-84/256 1.3061 -0.064
Seven-year note 100-192/256 1.3861 -0.066
10-year note 100-104/256 1.4561 -0.069
30-year bond 102-108/256 1.8937 -0.078

DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 1.25 -0.75
spread
U.S. 3-year dollar swap -0.75 -1.00
spread
U.S. 5-year dollar swap -2.25 -0.75
spread
U.S. 10-year dollar swap -7.75 -1.25
spread
U.S. 30-year dollar swap -37.00 -1.75
spread

(Reporting by Ross Kerber)