US Markets

TREASURIES-Yields rise as stimulus hopes boosts risk appetite

Credit: REUTERS/AKHTAR SOOMRO

U.S. Treasury yields rose towards the top end of their recent range on Monday as optimism that lawmakers will reach a new stimulus deal boosted risk-taking and reduced demand for the safe-haven bonds.

By Karen Brettell

NEW YORK, Oct 19 (Reuters) - U.S. Treasury yields rose towards the top end of their recent range on Monday as optimism that lawmakers will reach a new stimulus deal boosted risk-taking and reduced demand for the safe-haven bonds.

Stocks opened higher on hopes of a coronavirus vaccine by year-end, while investors were also encouraged by signs an agreement in Washington on a fiscal package could be reached soon. .N

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.

“It’s just continued 'risk on' in the equity markets, and also we’re getting news that in the next 48 hours Pelosi and Treasury Secretary (Steven) Mnuchin are looking at a stimulus package, so I think that’s one of the reasons that the market is selling off to higher yields,” said Tom di Galoma, a managing director at Seaport Global Holdings in New York.

Benchmark 10-year note yields US10YT=RR were last up three basis points higher on the day at 0.771%. 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, could also keep rates near historical lows, with the Federal Reserve also likely to act to keep rates low unless the economy shows improvement.

"The economic destruction from Covid, in my view, will keep rates pretty low,” said di Galoma.

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 9:32AM New York / 1332 GMT

Price

US T BONDS DEC0 UScv1

174-8/32

-0-21/32

10YR TNotes DEC0 TYcv1

138-216/256

-0-56/256

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.0975

0.0989

0.003

Six-month bills US6MT=RR

0.115

0.1167

0.000

Two-year note US2YT=RR

99-243/256

0.1512

0.006

Three-year note US3YT=RR

99-206/256

0.1906

0.008

Five-year note US5YT=RR

99-148/256

0.3361

0.018

Seven-year note US7YT=RR

98-210/256

0.5483

0.023

10-year note US10YT=RR

98-160/256

0.7706

0.027

20-year bond US20YT=RR

96-132/256

1.3255

0.030

30-year bond US30YT=RR

95-160/256

1.559

0.030

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

8.00

-0.50

U.S. 3-year dollar swap spread

7.75

-0.25

U.S. 5-year dollar swap spread

7.25

-0.25

U.S. 10-year dollar swap spread

2.50

0.00

U.S. 30-year dollar swap spread

-35.50

0.50

(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.

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