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TREASURIES-Yields move lower as stocks drop

Mon, 21st Sep 2020 15:44

By Chuck Mikolajczak
Sept 21 (Reuters) - U.S. Treasury yields moved lower, keying
off yet another sell-off in equity markets.
Major averages on Wall Street dropped once again, with the
S&P 500 on track for its fourth straight decline as
investors have become unnerved by a variety of concerns,
including the possibility of new coronavirus-driven lockdowns,
election uncertainty and the likelihood fresh fiscal stimulus
will remain stalled.
The yield on 10-year Treasury notes was down 4.3
basis points to 0.651%, near the low of the session.
"You had a little bit of curve steepening towards the end of
last week but right now the attention for Treasuries seems to be
on the stock market," said Jim Barnes, director of fixed income
at Bryn Mawr Trust in Berwyn, Pennsylvania.
"It’s not just the weakness in stocks for today. It is the
weakness we’ve seen in stocks over the past few days that is
finally catching up to the bond investors."
The benchmark S&P index has dropped more than 4% since the
U.S. Federal Reserve's policy announcement on Sept. 16 in which
the central bank pledged to keep interest rates near zero until
inflation is on track to modestly exceed a 2% target for some
time.
The index now stands down more than 9% from its Sept. 2
high, moving closer to what is traditionally known as a
"correction," or fall of 10%.
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 51.6 basis points, its lowest level since
Sept. 3 but still well above the recent low of 33 basis points
on July 24.
The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down 0.6
basis points to 0.133%.

September 21 Monday 10:27 AM New York / 1427 GMT
Price
US T BONDS DEC0 177-5/32 1-5/32
10YR TNotes DEC0 139-180/256 0-76/256
Price Current Net
Yield % Change
(bps)
Three-month bills 0.085 0.0862 -0.005
Six-month bills 0.11 0.1116 -0.002
Two-year note 99-252/256 0.1331 -0.006
Three-year note 99-236/256 0.1513 -0.008
Five-year note 99-248/256 0.2564 -0.023
Seven-year note 100-108/256 0.4382 -0.035
10-year note 99-192/256 0.6511 -0.043
20-year bond 99-20/256 1.1771 -0.055
30-year bond 99-128/256 1.3955 -0.057

DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 7.75 0.00
spread
U.S. 3-year dollar swap 7.00 -0.25
spread
U.S. 5-year dollar swap 6.00 0.25
spread
U.S. 10-year dollar swap 0.75 0.25
spread
U.S. 30-year dollar swap -36.00 0.50
spread










(Reporting by Chuck Mikolajczak)

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