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TREASURIES-Yields head lower as more supply looms

Mon, 17th Aug 2020 15:49

By Karen Pierog
CHICAGO, Aug 17 (Reuters) - U.S. Treasury yields fell on
Monday, retreating a bit from last week's higher levels as the
market awaited a new burst of supply to finance stimulus efforts
to combat the economic fallout from the coronavirus pandemic.
The benchmark 10-year yield was last down 3
basis points at 0.6785%.
"We're likely experiencing a little bit of snap back from
what we saw last week with yields moving out," said William
Northey, senior investment director at U.S. Bank Wealth
Yields rose last week as the market was hit with $112
billion in record supply of 30-year bonds and three- and 10-year
notes. Auctions this week include $25 billion of 20-year bonds
on Wednesday and $7 billion of 30-year Treasury-Inflation
Protected Securities (TIPS) on Thursday.
"There is a wall of supply that needs to be absorbed by the
capital markets," Northey said, adding that there could be a
"fatigue level" that would allow longer-term rates to drift a
bit higher.
Minutes of the Federal Reserve's latest meeting, due on
Wednesday, are expected to provide more insight into the central
bank's view of the economic recovery. Northey said the minutes
could include additional details on perspectives around
inflation targeting.
The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down less
than a basis point at 0.1451%.
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 53 basis points, about 3
basis points lower than at Friday's close.

August 17 Monday 9:33AM New York / 1433 GMT

Price Current Net
Yield % Change
Three-month bills 0.0925 0.0938 -0.005
Six-month bills 0.115 0.1167 -0.005
Two-year note 99-246/256 0.1451 -0.004
Three-year note 99-218/256 0.1748 -0.010
Five-year note 99-218/256 0.2802 -0.019
Seven-year note 99-82/256 0.4745 -0.029
10-year note 99-124/256 0.6785 -0.030
20-year bond 99-56/256 1.1694 -0.028
30-year bond 98-252/256 1.4167 -0.024

Last (bps) Net
U.S. 2-year dollar swap 8.50 -0.25
U.S. 3-year dollar swap 6.75 0.00
U.S. 5-year dollar swap 5.75 0.00
U.S. 10-year dollar swap -0.75 -0.50
U.S. 30-year dollar swap -40.50 -0.50

(By Karen Pierog in Chicago; Editing by Dan Grebler)

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