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TREASURIES-Traders ready for note auctions, U.S. Fed guidance

Credit: REUTERS/AKHTAR SOOMRO

Stable U.S. Treasury yields on Monday showed traders preparing for a consequential week of new supply and guidance from the U.S. central bank.

By Ross Kerber

Aug 24 (Reuters) - Stable U.S. Treasury yields on Monday showed traders preparing for a consequential week of new supply and guidance from the U.S. central bank.

The benchmark 10-year US10YT=RR yield was down less than a basis point at 0.6347% in morning trading.

The figure was roughly at the middle of the range where the 10-year note has traded since late March and indicated investors looking ahead to auctions of $148 billion worth of 2-year, 5-year and 7-year notes starting on Tuesday said Ben Jeffery, BMO Capital Markets rates strategist.

Remarks from Federal Reserve Chairman Jerome Powell scheduled for Thursday also could shed light on the central bank's next steps to promote an economic recovery.

"People are probably just squaring positions ahead of the more consequential events later this week," Jeffery said.

Against the backdrop of a coronavirus pandemic that has killed more than 175,000 Americans, and an ensuing recession that has seen the loss of millions of jobs and President Donald Trump's erosion in the polls, U.S. Republicans plan a partly virtual, partly in-person convention this week featuring Trump speaking every night.

The S&P 500 and Nasdaq were set to open at record highs on Monday after the U.S. health regulator approved the emergency use of blood plasma in COVID-19 patients and on a report that the Trump administration may fast-track a vaccine candidate.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, US2US10=RR seen as an indicator of economic expectations, was at 48 basis points, little changed from Friday's close but well above its recent low of 33 basis points reached on July 24.

The two-year US2YT=RR U.S. Treasury yield, which typically moves in step with interest rate expectations, was roughly unchanged at 0.1493%.

August 24 Monday 9:12AM New York / 1312 GMT

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.095

0.0963

0.000

Six-month bills US6MT=RR

0.12

0.1217

0.003

Two-year note US2YT=RR

99-244/256

0.1493

0.002

Three-year note US3YT=RR

99-222/256

0.1698

0.003

Five-year note US5YT=RR

99-230/256

0.2707

-0.001

Seven-year note US7YT=RR

99-120/256

0.4529

-0.002

10-year note US10YT=RR

99-232/256

0.6347

-0.005

20-year bond US20YT=RR

100

1.125

-0.006

30-year bond US30YT=RR

100-196/256

1.3439

-0.009

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

6.75

-0.50

U.S. 3-year dollar swap spread

5.75

-0.75

U.S. 5-year dollar swap spread

4.25

-0.75

U.S. 10-year dollar swap spread

-1.50

-1.25

U.S. 30-year dollar swap spread

-38.75

-0.75

(Reporting by Ross Kerber in Boston; Editing by Will Dunham)

((ross.kerber@thomsonreuters.com; (617) 856 4341; Reuters Messaging: Ross.Kerber.Reuters.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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