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TREASURIES-Yields edge lower as stocks stay choppy

Credit: REUTERS/DADO RUVIC

U.S. Treasury yields edged lower on Tuesday, as equities remained choppy after their recent run lower ahead of comments from U.S. Federal Reserve Chair Powell before the House Financial Services Committee.

By Chuck Mikolajczak

Sept 22 (Reuters) - U.S. Treasury yields edged lower on Tuesday, as equities remained choppy after their recent run lower ahead of comments from U.S. Federal Reserve Chair Powell before the House Financial Services Committee.

Yields on the 10-year U.S. Treasury have been falling over the last several sessions as stocks have come under pressure, with the S&P 500 down 3.5% over the prior four sessions on concerns about rising coronavirus cases potentially leading to fresh lockdowns, election uncertainty and Washington gridlock stalling a new round of coronavirus relief.

With equities under pressure, investors often move into defensive plays such as Treasuries, driving rates lower. Still, the yield on the 10-year remained within the 6-basis-point range it has held since the Fed's most recent policy statement on Sept. 16.

"Overall, we are seeing fixed income markets exude a great deal of calmness and a calm approach in contrast to what we are seeing in equities," said Bill Merz, head of fixed income research at U.S. Bank Wealth Management in Minneapolis.

"That is during a time when equity markets have experienced significant volatility, significant downside, and 10-year yields have done virtually nothing."

The yield on 10-year Treasury notes US10YT=RR was down 0.5 basis point at 0.666 percent.

Powell is set to speak at 10:30 a.m. EDT (1430 GMT) on coronavirus aid. In a statement on Monday, he said the central bank remains committed to using all the tools at its disposal to help the U.S. economy recover from the pandemic.

Treasuries had little reaction to economic data which showed U.S. home sales surged to their highest level in nearly 14 years in August, as the housing market remains a strength of the economy.

The two-year US2YT=RR U.S. Treasury yield, which typically moves in step with interest rate expectations <US2YT=RR> was down 0.2 basis point at 0.135 percent.

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 52.8 basis points, rebounding from a two-week low hit on Monday.

September 22 Tuesday 10:18AM New York / 1418 GMT

Price

US T BONDS DEC0 UScv1

176-22/32

0-5/32

10YR TNotes DEC0 TYcv1

139-152/256

0-8/256

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.1

0.1014

-0.003

Six-month bills US6MT=RR

0.1075

0.1091

0.000

Two-year note US2YT=RR

99-251/256

0.1351

-0.002

Three-year note US3YT=RR

99-236/256

0.1513

-0.006

Five-year note US5YT=RR

99-240/256

0.2627

-0.005

Seven-year note US7YT=RR

100-84/256

0.4519

-0.002

10-year note US10YT=RR

99-156/256

0.6658

-0.005

20-year bond US20YT=RR

98-188/256

1.1967

-0.011

30-year bond US30YT=RR

99-28/256

1.4116

-0.014

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

8.00

0.25

U.S. 3-year dollar swap spread

7.25

0.25

U.S. 5-year dollar swap spread

6.00

0.00

U.S. 10-year dollar swap spread

0.75

0.25

U.S. 30-year dollar swap spread

-36.50

0.25

(Reporting by Chuck Mikolajczak; editing by Jonathan Oatis)

((charles.mikolajczak@tr.com; @ChuckMik; Reuters Messaging: charles.mikolajczak.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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