US Markets

TREASURIES-Yields trend lower with boost in safe-haven demand

Credit: REUTERS/YARA NARDI

U.S. Treasury yields edged lower on Thursday as investors fled risk amid rising coronavirus cases, an unexpected jump in new jobless claims, and uncertainty over another round of fiscal stimulus to boost the economy.

By Karen Pierog

CHICAGO, Oct 15 (Reuters) - U.S. Treasury yields edged lower on Thursday as investors fled risk amid rising coronavirus cases, an unexpected jump in new jobless claims, and uncertainty over another round of fiscal stimulus to boost the economy.

The benchmark 10-year US10YT=RR yield was last down less than a basis point at 0.7157%.

Tony Rodriguez, head of fixed income strategy at Nuveen, said the global rise in virus cases and a lack of more fiscal aid for the U.S. economy were center stage in the market.

"Both of those being obviously negative for near-term growth," he said, adding that a sell-off in risk markets sparked Treasury buying, pushing yields lower.

U.S. Treasury Secretary Steve Mnuchin said on Thursday that he will keep working on reaching a stimulus deal with Democratic House Speaker Nancy Pelosi before the Nov. 3 election.

But Rodriguez said Republican senators remain an impediment to getting a deal done. Senate Majority Leader Mitch McConnell has said his chamber would vote on a slimmed-down $500 billion COVID-19 bill next week.

Adding to economic worries was Thursday's U.S. Labor Department report on initial claims for state unemployment benefits, which totaled a seasonally adjusted 898,000 for the week ended Oct. 10, compared to 845,000 in the prior week. Economists polled by Reuters had forecast 825,000 applications in the latest week.

The two-year US2YT=RR U.S. Treasury yield, which typically moves in step with interest rate expectations, was last down less than a basis point at 0.137%.

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 57.50 basis points, 1 basis point lower from Wednesday's close.

October 15 Thursday 9:52AM New York / 1452 GMT

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.1

0.1014

-0.005

Six-month bills US6MT=RR

0.11

0.1116

-0.005

Two-year note US2YT=RR

99-250/256

0.137

-0.002

Three-year note US3YT=RR

99-220/256

0.1721

-0.003

Five-year note US5YT=RR

99-192/256

0.3009

-0.001

Seven-year note US7YT=RR

99-36/256

0.5009

-0.003

10-year note US10YT=RR

99-36/256

0.7157

-0.006

20-year bond US20YT=RR

97-164/256

1.2598

-0.013

30-year bond US30YT=RR

97-80/256

1.4868

-0.012

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

8.75

-0.25

U.S. 3-year dollar swap spread

8.50

0.00

U.S. 5-year dollar swap spread

8.00

0.50

U.S. 10-year dollar swap spread

3.50

0.25

U.S. 30-year dollar swap spread

-33.50

0.25

(Reporting by Karen Pierog; Editing by Bernadette Baum)

((karen.pierog@thomsonreuters.com; +1 312 408 8647; Reuters Messaging: karen.pierog.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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