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TREASURIES-Yields lower as traders weigh Biden tax plan prospects

Credit: REUTERS/THOMAS WHITE

By Ross Kerber

April 23 (Reuters) - Traders pushed U.S. Treasury yields lower on Friday as they weighed the political prospects of a new tax plan from President Joe Biden and the direction of Federal Reserve policy.

The benchmark 10-year yield US10YT=RR was down 2.3 basis points at 1.5331% in morning trading, at low end of the 1.528% to 1.646% range it has held since April 15.

In a week with few significant economic data releases, investors seemed to be waiting for more clarity from Washington, said Priya Misra, head of global rates strategy for TD Securities. For now, "We're sort of in a state of limbo," she said.

Yields slipped on Thursday and Wall Street's main stock indexes sank nearly 1% following reports of Biden's plan to raise taxes on the wealthiest Americans, including the largest-ever increase in levies on investment gains, to fund about $1 trillion in childcare, universal pre-kindergarten education and paid leave for workers. But analysts cautioned the plan faces many hurdles to passage.

Investors also are looking ahead to guidance from a Fed meeting next week, on Tuesday and Wednesday, although the U.S. central bank's Federal Open Market Committee is not expected to make meaningful adjustments to policy.

Treasury auctions of 2-year, 5-year and 7-year notes on Monday and Tuesday totaling $183 billion will also show the market's appetite for U.S. debt.

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 138 basis points, about a basis point lower than Thursday's close.

The two-year US2YT=RR U.S. Treasury yield, which typically moves in step with interest rate expectations, was roughly unchanged at 0.1494%.

April 23 Friday 9:01AM New York / 1301 GMT

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.0225

0.0228

0.003

Six-month bills US6MT=RR

0.035

0.0355

-0.002

Two-year note US2YT=RR

99-244/256

0.1494

-0.002

Three-year note US3YT=RR

100-48/256

0.3115

-0.008

Five-year note US5YT=RR

99-210/256

0.7872

-0.015

Seven-year note US7YT=RR

100-56/256

1.2169

-0.019

10-year note US10YT=RR

96-76/256

1.5331

-0.023

20-year bond US20YT=RR

96-68/256

2.1065

-0.025

30-year bond US30YT=RR

92-140/256

2.218

-0.023

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

12.25

0.25

U.S. 3-year dollar swap spread

14.00

0.50

U.S. 5-year dollar swap spread

9.50

0.00

U.S. 10-year dollar swap spread

-0.25

0.50

U.S. 30-year dollar swap spread

-26.50

0.25

(Reporting by Ross Kerber in Boston; Editing by Kirsten Donovan)

((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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