US Markets

TREASURIES-Yields mixed as fiscal stimulus and Fed meeting loom

Credit: REUTERS/DADO RUVIC

U.S. Treasury yields were mixed on Friday as stocks fell and the market looked ahead to developments next week on new fiscal stimulus steps, as well as a Federal Reserve meeting.

 (Recasts, updates yields, adds analyst comments)
    By Karen Pierog
    CHICAGO, July 24 (Reuters) - U.S. Treasury yields were mixed
on Friday as stocks fell and the market looked ahead to
developments next week on new fiscal stimulus steps, as well as
a Federal Reserve meeting. 
    The benchmark 10-year <US10YT=RR> yield was last up less
than a basis point at 0.5888%.
    Priya Misra, head of global rates strategy for TD Securities
in New York, said the 10-year yield, which is near the low end
of the range where it has been trading since March, may break
lower as more supply may be coming to fund another potential
round of fiscal aid from Washington to fight the economic
fallout from the coronavirus pandemic. 
    "I think we're breaking out. We're going lower in yields
because of what's happening with risk assets, data momentum
seems to be slowing. So my view is it's going to decline," she
said.
    U.S. Senate Republicans will unveil their proposal next week
for a fresh round of coronavirus aid, including more direct
payments to Americans and a partial extension of enhanced
unemployment benefits, Senate Majority Leader Mitch McConnell
said on Thursday. [nL2N2EU0NK] [nL2N2EV1A5]
    Fed policy makers will meet Tuesday and Wednesday. 
    "I think they're going to clear up their economic forecast,
not that that matters a great deal," said Stan Shipley, research
analyst for Evercore ISI, adding that more clarity on the Fed's
forward views might come at the central bank's September
meeting.
    Wall Street was lower as U.S.-China tensions and fears over
mounting coronavirus cases fed selling ahead of the
weekend.[nL2N2EV1CD] 
    After auctions this week of $17 billion of 20-year bonds and
$14 billion of 10-year Treasury-Inflation Protected Securities
(TIPS), the U.S. Treasury will offer $141 billion of two-, five-
and seven-year notes next week.  
    The two-year <US2YT=RR> U.S. Treasury yield, which typically
moves in step with interest rate expectations, was unchanged at
0.1494%.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes <US2US10=TWEB>, which is viewed as an indicator of
economic expectations, was last at 43.80 basis points, about
1.60 basis point higher than at Thursday's close.
July 24 Friday 1:55PM New York / 1855 GMT
                               Price                  
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills <US3MT=RR>  0.1075       0.109     -0.008
 Six-month bills  <US6MT=RR>   0.1325       0.1344    0.000
 Two-year note <US2YT=RR>      99-244/256   0.1494    0.000
 Three-year note <US3YT=RR>    99-222/256   0.1699    -0.002
 Five-year note <US5YT=RR>     99-226/256   0.274     0.008
 Seven-year note <US7YT=RR>    100-96/256   0.445     0.007
 10-year note  <US10YT=RR>     100-88/256   0.5888    0.007
 20-year bond <US20YT=RR>      101-204/256  1.0245    -0.005
 30-year bond  <US30YT=RR>     100-68/256   1.2393    -0.011
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         6.00         0.25    
 spread                                               
 U.S. 3-year dollar swap         4.75         0.50    
 spread                                               
 U.S. 5-year dollar swap         3.00        -0.25    
 spread                                               
 U.S. 10-year dollar swap       -1.00         0.25    
 spread                                               
 U.S. 30-year dollar swap      -42.00         1.75    
 spread                                               
                                                      
 
 (Reporting by Karen Pierog; editing by Jonathan Oatis and David
Gregorio)
 ((karen.pierog@thomsonreuters.com; +1 312 408 8647; Reuters
Messaging: karen.pierog.thomsonreuters.com@reuters.net))

Keywords: USA BONDS/ (UPDATE 1)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More