US Markets

TREASURIES-Yield rise as COVID vaccine hopes boost risk appetite

Credit: REUTERS/DADO RUVIC

U.S. Treasury yields rose and the yield curve steepened on Wednesday as hopes of a COVID-19 vaccine boosted risk appetite and reduced demand for safe-haven bonds.

By Karen Brettell

NEW YORK, July 15 (Reuters) - U.S. Treasury yields rose and the yield curve steepened on Wednesday as hopes of a COVID-19 vaccine boosted risk appetite and reduced demand for safe-haven bonds.

Moderna Inc's MRNA.O experimental vaccine for COVID-19 showed it was safe and provoked immune responses in all 45 healthy volunteers in an ongoing early-stage study, U.S. researchers reported on Tuesday.

“The market is trading fairly ‘risk on’ on vaccine hopes,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. “It’s largely COVID news driving the price action recently.”

Investors are wary about new economic damage as a sharp rise in COVID infections in many U.S. states leads to new shutdowns aimed at stemming the spread of the virus.

Benchmark 10-year notes US10YT=RR rose two basis points to 0.630%. They have held in a tight range from 0.569% to 0.784% since mid-June.

The yield curve between two-year and 10-year notes US2US10=TWEB steepened one basis point to 47 basis points.

A Federal Reserve report on Wednesday showed that U.S. businesses saw an uptick in activity into the beginning of July as states eased restrictions to contain the novel coronavirus pandemic, but many businesses were uncertain about the economic outlook.

The United States has failed to control the coronavirus and there is a high level of uncertainty over how much the pandemic will affect the economy, Philadelphia Federal Reserve Bank President Patrick Harker said on Wednesday.

Data showed that U.S. factory output rose 7.2% in June, the most in more than 74 years, as motor vehicle production accelerated amid the reopening of businesses, but the nascent recovery in manufacturing activity was overshadowed by surging new COVID-19 infections.

The next major economic focuses are jobless claims and retail sales on Thursday.

July 15 Wednesday 3:00PM New York / 1900 GMT

Price

US T BONDS SEP0 UScv1

179-24/32

-0-17/32

10YR TNotes SEP0 TYcv1

139-92/256

-0-16/256

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.135

0.1369

-0.008

Six-month bills US6MT=RR

0.14

0.142

-0.005

Two-year note US2YT=RR

99-241/256

0.155

0.000

Three-year note US3YT=RR

99-214/256

0.1799

0.000

Five-year note US5YT=RR

99-212/256

0.285

0.003

Seven-year note US7YT=RR

100-52/256

0.4703

0.009

10-year note US10YT=RR

99-244/256

0.6299

0.016

20-year bond US20YT=RR

100-88/256

1.1056

0.027

30-year bond US30YT=RR

98

1.3314

0.030

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

5.25

0.75

U.S. 5-year dollar swap spread

3.75

0.50

U.S. 10-year dollar swap spread

-2.25

0.25

U.S. 30-year dollar swap spread

-47.00

0.00

(Reporting by Karen Brettell; editing by Jonathan Oatis and Leslie Adler)

((karen.brettell@thomsonreuters.com))

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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