US Markets

TREASURIES-Longer-term yields inch lower as new supply looms

Credit: REUTERS/DADO RUVIC

U.S. Treasury yields on the long end of the curve were a touch lower on Monday amid strengthening stocks and ahead of new supply this week.

By Karen Pierog

CHICAGO, July 20 (Reuters) - U.S. Treasury yields on the long end of the curve were a touch lower on Monday amid strengthening stocks and ahead of new supply this week.

The benchmark 10-year US10YT=RR yield was last down 1 basis point at 0.6184%.

Kim Rupert, senior economist at Action Economics in San Francisco, said Treasuries were trading in a narrow range as they tracked equities "a little bit."

"As Wall Street started to improve and the NASDAQ has really jumped, we saw some of the bid come out of Treasuries," she said.

Risk appetite has seesawed as investors weigh a rise in the number of U.S. coronavirus cases, deaths, hospitalizations, and rates of positive test results against promising vaccine developments.

On the supply front, the Treasury Department will sell $17 billion of 20-year bonds on Wednesday and $14 billion of 10-year Treasury-Inflation Protected Securities (TIPS) on Thursday.

Bill Merz, head of fixed income research at U.S. Bank Wealth Management in Minneapolis, said the Treasury market was able to get through massive supply earlier this year "with minimal disruption and minimal volatility" in yields.

"That gives us confidence that what we're likely to see here in the next couple of months in terms of issuance is not going to be a major event for the market," he said.

Also this week, negotiations over a new round of stimulus payments to prop up the coronavirus-hit economy will be the focus in the U.S. Congress.

The two-year US2YT=RR U.S. Treasury yield, which typically moves in step with interest rate expectations, was up less than a basis point at 0.1492%.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes US2US10=TWEB, which is viewed as an indicator of economic expectations, was at 46.80 basis points, about a basis point lower than at Friday's close.

July 20 Monday 2:06PM New York / 1906 GMT

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.115

0.1166

0.000

Six-month bills US6MT=RR

0.1275

0.1294

-0.003

Two-year note US2YT=RR

99-244/256

0.1492

0.002

Three-year note US3YT=RR

99-216/256

0.1775

0.002

Five-year note US5YT=RR

99-214/256

0.2835

0.001

Seven-year note US7YT=RR

100-60/256

0.4656

-0.002

10-year note US10YT=RR

100-16/256

0.6184

-0.010

20-year bond US20YT=RR

100-156/256

1.0907

-0.014

30-year bond US30YT=RR

98-100/256

1.3154

-0.014

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

7.00

-0.50

U.S. 3-year dollar swap spread

5.00

-0.50

U.S. 5-year dollar swap spread

3.25

-0.50

U.S. 10-year dollar swap spread

-2.50

-0.75

U.S. 30-year dollar swap spread

-47.00

-1.25

(Reporting by Karen Pierog in Chicago; editing by Jonathan Oatis and Chizu Nomiyama)

((karen.pierog@thomsonreuters.com; +1 312 408 8647; Reuters Messaging: karen.pierog.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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