TREASURIES-Yields pare rise as stimulus optimism fades
By Karen Brettell
NEW YORK, Oct 19 (Reuters) - U.S. Treasury yields came off their highs on Monday as optimism ebbed that U.S. lawmakers will reach a deal to launch new stimulus in the near term, though the yields held higher on the day.
House Speaker Nancy Pelosi said on Sunday that differences remained with President Donald Trump's administration on a wide-ranging coronavirus relief package but that she was optimistic legislation could be pushed through before Election Day.
“There was some optimism about a deal potentially being reached … it seems like some of that optimism has started to fade a little bit," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. “People realize that the real stimulus is very likely to come after the election, and most likely in early 2021.”
Benchmark 10-year note yields US10YT=RR rose two basis points on the day to 0.762%, after earlier getting as high as 0.781%. The yields have traded in a tight range from 0.50% to 0.80% since April, with the exception of a brief spike to 0.96% in early June.
Some investors are betting long-dated yields will rise after the Nov. 3 presidential election on the likelihood of greater fiscal spending to boost the economy, with Democrats expected to support a larger package if they win a majority in the Senate.
Ongoing weakness from Covid-related business disruptions, however, is likely to keep downward pressure on yields with the Federal Reserve also likely to act to keep rates near historical lows unless the economy shows improvement.
"The economic destruction from Covid, in my view, will keep rates pretty low,” said Tom di Galoma, a managing director at Seaport Global Holdings in New York.
The Treasury Department will sell $22 billion in 20-year bonds on Wednesday and $17 billion in five-year Treasury Inflation-Protected Securities (TIPS) on Thursday.
October 19 Monday 3:00PM New York / 1900 GMT
US T BONDS DEC0 UScv1
10YR TNotes DEC0 TYcv1
Current Yield %
Net Change (bps)
Three-month bills US3MT=RR
Six-month bills US6MT=RR
Two-year note US2YT=RR
Three-year note US3YT=RR
Five-year note US5YT=RR
Seven-year note US7YT=RR
10-year note US10YT=RR
20-year bond US20YT=RR
30-year bond US30YT=RR
DOLLAR SWAP SPREADS
Net Change (bps)
U.S. 2-year dollar swap spread
U.S. 3-year dollar swap spread
U.S. 5-year dollar swap spread
U.S. 10-year dollar swap spread
U.S. 30-year dollar swap spread
(Editing by Nick Zieminski)