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TREASURIES-Yields lower as investors await Washington relief deal

Credit: REUTERS/DADO RUVIC

U.S. Treasury yields fell on Tuesday as investors waited for Washington lawmakers to reach a deal on coronavirus relief and took stock of mixed corporate earnings.

By Ross Kerber

July 28 (Reuters) - U.S. Treasury yields fell on Tuesday as investors waited for Washington lawmakers to reach a deal on coronavirus relief and took stock of mixed corporate earnings.

The benchmark 10-year US10YT=RR yield was down 2.7 basis points at 0.5823% in afternoon trading, after reaching as high as 0.637% in the session.

Yields declined as traders shifted back into safe-haven securities and away from riskier bets on stocks, and a gold rally also fizzled, said FHN Financial interest rate strategist Jim Vogel. [nL3N2EZ3JO]

"There's been a big decline in momentum in speculative ideas like gold and some earnings disappointments," he said. Yields also ticked down after the U.S. Federal Reserve said it would extend several lending facilities. [nL2N2EZ0VO]

U.S. Senate Republicans announced on Monday a $1 trillion coronavirus aid package hammered out with the White House, but the proposal sparked immediate opposition.

A lack of progress will keep lowering bond yields, said DRW Trading strategist Lou Brien, as an approaching end of unemployment benefits threatens to set back the economy.

"The longer they go without coming to an agreement, the better the underlying bid will be" for Treasuries, Brien said.

U.S. stocks fell, with the blue-chip Dow Jones industrial average .DJI weighed down by 3MCo MMM.N and McDonald's Corp MCD.Nshares after the companies posted quarterly profits that missed estimates.

The U.S. Treasury Department sold $44 billion of 7-year notes at auction at a high yield of 0.446%.

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 44 basis points, about 3 basis points below Monday's close.

The two-year US2YT=RR U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 1.3 basis points at 0.1426%.

July 28 Tuesday 2:02PM New York / 1802 GMT

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.11

0.1116

0.000

Six-month bills US6MT=RR

0.125

0.1272

-0.005

Two-year note US2YT=RR

99-247/256

0.1426

-0.013

Three-year note US3YT=RR

99-226/256

0.1647

-0.018

Five-year note US5YT=RR

99-234/256

0.2673

-0.023

Seven-year note US7YT=RR

100-112/256

0.4358

-0.023

10-year note US10YT=RR

100-104/256

0.5823

-0.027

20-year bond US20YT=RR

102-24/256

1.008

-0.032

30-year bond US30YT=RR

100-172/256

1.223

-0.029

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

7.25

1.00

U.S. 3-year dollar swap spread

5.75

1.25

U.S. 5-year dollar swap spread

3.50

0.25

U.S. 10-year dollar swap spread

-1.00

0.00

U.S. 30-year dollar swap spread

-41.00

0.25

(Reporting by Ross Kerber in Boston Editing by Nick Zieminski and Richard Chang)

((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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