By Karen Pierog
CHICAGO, July 21 (Reuters) - U.S. Treasury yields fell
slightly on Tuesday in range-bound trading as the market watched
for the next round of aid out of Washington to combat the
economic fallout from the coronavirus pandemic.
The benchmark 10-year yield was last down 1.5
basis points at 0.6053%.
Kathy Jones, chief fixed income strategist at the Schwab
Center for Financial Research in New York, said U.S. Federal
Reserve policy "has sort of crushed volatility and kept yields
very low."
However, a bigger-than-expected fiscal stimulus bill could
steepen the yield curve "and encourage expectations that maybe
we get a little more growth sooner rather than later and the Fed
might pivot sooner rather than later," Jones said, adding that
would be surprising but possible.
Negotiations between congressional lawmakers and the White
House over a new round of aid were on tap for Tuesday as virus
infections and deaths surged to record levels.
Jones said if a lot more states shut down again and
evidence emerges that the economy is rolling back over to
recession, the 10-year yield could head lower.
The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last down
less than a basis point at 0.1452%.
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 46 basis points, less than a
basis point lower than at Monday's close.
No bids were submitted in 28-day repurchase agreement (repo)
operation, according to the New York Federal Reserve.
July 21 Tuesday 9:12AM New York / 1412 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 0.125 0.1268 0.003
Six-month bills 0.135 0.137 0.003
Two-year note 99-246/256 0.1452 -0.004
Three-year note 99-220/256 0.1723 -0.006
Five-year note 99-224/256 0.2755 -0.009
Seven-year note 100-80/256 0.4542 -0.014
10-year note 100-48/256 0.6053 -0.015
20-year bond 100-208/256 1.0793 -0.015
30-year bond 98-160/256 1.3058 -0.012
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 6.75 -0.25
spread
U.S. 3-year dollar swap 5.00 0.00
spread
U.S. 5-year dollar swap 3.50 0.25
spread
U.S. 10-year dollar swap -2.25 0.50
spread
U.S. 30-year dollar swap -47.00 0.25
spread
(Reporting by Karen Pierog in Chicago; editing by Jonathan
Oatis)
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