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TREASURIES-Yields flat after U.S. durable goods data

Fri, 25th Sep 2020 19:48

(Adds George comments, updates prices)
By Chuck Mikolajczak
Sept 25 (Reuters) - U.S. Treasury yields moved off earlier
lows on Friday in the wake of an upbeat report on U.S. durable
goods, while stocks shook off a weaker start to turn higher.
The Commerce Department said orders for non-defense capital
goods excluding aircraft, a closely watched proxy for business
spending plans, rose 1.8% in August, above the 0.5% forecast.

The report did little, however, to alter views that the
economy was slowing down in its recovery from
coronavirus-induced lockdowns as government support to
businesses and the unemployed peters out.
"Overall, it is more trends and it doesn’t feel that data is
going to cause some massive volatility in the market the way it
did and the way it will in six months," said Justin Lederer, an
interest rate strategist at Cantor Fitzgerald in New York.
Democrats in the U.S. House of Representatives are working
on a $2.2 trillion coronavirus stimulus package that could be
voted on next week, a key lawmaker said on Thursday, as House
Speaker Nancy Pelosi reiterated that she is ready to negotiate
with the White House.
Analysts at Jefferies noted that while the report points to
a large capital expenditures contribution to economic growth in
the third quarter, sustaining the momentum beyond that "will be
difficult."
The yield on 10-year Treasury notes was down 0.1
basis points to 0.663% after falling as low as 0.651% on the
day.
Kansas City Federal Reserve president Esther George said on
Friday that the impact of the recession on households and
businesses could still lead to a strain on the banking system
which would deepen the recession, the second Fed official to
warn of credit issues this week.
The yield on the 10-year remained within the 6-basis-point
range it has held since the Federal Reserve's most recent policy
statement on Sept. 16, even as equities have struggled. The S&P
500 is poised to post its fourth straight week of
declines.
"Overall the market remains fairly rangebound. There is some
intraday, intra-week volatility that when you really look at it,
we just don’t go anywhere," said Lederer.
The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was
down 0.2 basis points to 0.133%.
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, up slightly from a
two-week low of 51.2 hit on Monday.

September 25 Friday 2:33PM New York / 1833 GMT
Price
US T BONDS DEC0 176-30/32 -0-1/32
10YR TNotes DEC0 139-156/256 0-8/256
Price Current Net
Yield % Change
(bps)
Three-month bills 0.1 0.1014 0.002
Six-month bills 0.11 0.1116 0.003
Two-year note 99-252/256 0.1328 -0.002
Three-year note 99-234/256 0.1541 -0.005
Five-year note 99-232/256 0.2689 -0.006
Seven-year note 99-112/256 0.4567 -0.005
10-year note 99-164/256 0.6626 -0.001
20-year bond 98-236/256 1.186 0.003
30-year bond 99-32/256 1.411 0.010

DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 9.00 0.00
spread
U.S. 3-year dollar swap 8.50 0.25
spread
U.S. 5-year dollar swap 6.75 0.25
spread
U.S. 10-year dollar swap 2.50 0.25
spread
U.S. 30-year dollar swap -34.00 0.00
spread


(Reporting by Chuck Mikolajczak; Editing by Dan Grebler and
Cynthia Osterman)

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