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TREASURIES-Yields move lower as stocks drop

Credit: REUTERS/AKHTAR SOOMRO

U.S. Treasury yields moved lower, keying off yet another sell-off in equity markets.

By Chuck Mikolajczak

Sept 21 (Reuters) - U.S. Treasury yields moved lower, keying off yet another sell-off in equity markets.

Major averages on Wall Street dropped once again, with the S&P 500 .SPX on track for its fourth straight decline as investors have become unnerved by a variety of concerns, including the possibility of new coronavirus-driven lockdowns, election uncertainty and the likelihood fresh fiscal stimulus will remain stalled.

The yield on 10-year Treasury notes US10YT=RR was down 4.3 basis points to 0.651%, near the low of the session.

"You had a little bit of curve steepening towards the end of last week but right now the attention for Treasuries seems to be on the stock market," said Jim Barnes, director of fixed income at Bryn Mawr Trust in Berwyn, Pennsylvania.

"It’s not just the weakness in stocks for today. It is the weakness we’ve seen in stocks over the past few days that is finally catching up to the bond investors."

The benchmark S&P index has dropped more than 4% since the U.S. Federal Reserve's policy announcement on Sept. 16 in which the central bank pledged to keep interest rates near zero until inflation is on track to modestly exceed a 2% target for some time.

The index now stands down more than 9% from its Sept. 2 high, moving closer to what is traditionally known as a "correction," or fall of 10%.

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 51.6 basis points, its lowest level since Sept. 3 but still well above the recent low of 33 basis points on July 24.

The two-year US2YT=RR U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 0.6 basis points to 0.133%.

September 21 Monday 10:27 AM New York / 1427 GMT

Price

US T BONDS DEC0 UScv1

177-5/32

1-5/32

10YR TNotes DEC0 TYcv1

139-180/256

0-76/256

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.085

0.0862

-0.005

Six-month bills US6MT=RR

0.11

0.1116

-0.002

Two-year note US2YT=RR

99-252/256

0.1331

-0.006

Three-year note US3YT=RR

99-236/256

0.1513

-0.008

Five-year note US5YT=RR

99-248/256

0.2564

-0.023

Seven-year note US7YT=RR

100-108/256

0.4382

-0.035

10-year note US10YT=RR

99-192/256

0.6511

-0.043

20-year bond US20YT=RR

99-20/256

1.1771

-0.055

30-year bond US30YT=RR

99-128/256

1.3955

-0.057

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

7.75

0.00

U.S. 3-year dollar swap spread

7.00

-0.25

U.S. 5-year dollar swap spread

6.00

0.25

U.S. 10-year dollar swap spread

0.75

0.25

U.S. 30-year dollar swap spread

-36.00

0.50

(Reporting by Chuck Mikolajczak)

((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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