US Markets

TREASURIES-Yields pare rise as stimulus optimism fades

Credit: REUTERS/AKHTAR SOOMRO

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.

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

Price

US T BONDS DEC0 UScv1

174-16/32

-0-13/32

10YR TNotes DEC0 TYcv1

138-236/256

-0-36/256

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.095

0.0963

0.000

Six-month bills US6MT=RR

0.1125

0.1141

-0.003

Two-year note US2YT=RR

99-245/256

0.1471

0.002

Three-year note US3YT=RR

99-208/256

0.188

0.005

Five-year note US5YT=RR

99-156/256

0.3297

0.012

Seven-year note US7YT=RR

98-224/256

0.5403

0.015

10-year note US10YT=RR

98-180/256

0.7623

0.018

20-year bond US20YT=RR

96-180/256

1.3145

0.018

30-year bond US30YT=RR

95-220/256

1.5489

0.020

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

8.50

0.00

U.S. 3-year dollar swap spread

8.25

0.25

U.S. 5-year dollar swap spread

7.75

0.25

U.S. 10-year dollar swap spread

3.00

0.50

U.S. 30-year dollar swap spread

-35.00

1.00

(Editing by Nick Zieminski)

((karen.brettell@thomsonreuters.com))

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