US Markets

Yields edge higher but hold in tight range as investors weigh COVID risks

Credit: REUTERS/DADO RUVIC

U.S. Treasury yields inched higher on Friday as investors weighed the prospect of new economic damage from shutdowns meant to stem the spread of COVID-19 against the possibility that the worst has passed.

By Karen Brettell

NEW YORK, July 17 (Reuters) - U.S. Treasury yields inched higher on Friday as investors weighed the prospect of new economic damage from shutdowns meant to stem the spread of COVID-19 against the possibility that the worst has passed.

The United States shattered its daily record for coronavirus infections on Thursday, reporting more than 77,000 new cases as the number of deaths in a 24-hour period rose by nearly 1,000, according to a Reuters tally.

But risk appetite remains strong and stocks opened higher on optimism about an economic recovery. .N

Treasuries are “taking cues from COVID headlines and equities, but its not exactly one for one,” said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. “On the backups there’s buyers, but we’re not really breaking out of any ranges here.”

Benchmark 10-year notes US10YT=RR rose less than a basis point to 0.615%. They have held in a tight range from 0.569% to 0.784% since mid-June.

The yield curve between two-year and 10-year notes US2US10=TWEB was little changed on the day at 47 basis points.

Data on Friday showed that U.S. homebuilding surged in June amid reports of rising demand for housing in lower density areas as companies allow employees flexibility to work from home because of the COVID-19 pandemic.

The Treasury Department will sell $17 billion in 20-year bonds and $14 billion in 10-year Treasury-Inflation Protected Securities (TIPS) next week.

TIPS have rallied for the past few months on expectations that stimulus from the United States government and Federal Reserve will spur inflation.

Yields on 10-year TIPS US10YTIP=RR fell to minus 0.82% on Friday. They have been down from around minus 0.40% in early June.

July 17 Friday 9:32AM New York / 1332 GMT

Price

US T BONDS SEP0 UScv1

180-3/32

-0-4/32

10YR TNotes SEP0 TYcv1

139-112/256

-0-12/256

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.11

0.1116

-0.002

Six-month bills US6MT=RR

0.1325

0.1344

0.002

Two-year note US2YT=RR

99-245/256

0.1471

0.000

Three-year note US3YT=RR

99-220/256

0.1722

0.000

Five-year note US5YT=RR

99-222/256

0.2771

0.002

Seven-year note US7YT=RR

100-72/256

0.4588

0.002

10-year note US10YT=RR

100-24/256

0.6151

0.003

20-year bond US20YT=RR

100-172/256

1.0872

0.008

30-year bond US30YT=RR

98-144/256

1.3084

0.007

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

7.50

0.25

U.S. 3-year dollar swap spread

5.75

0.25

U.S. 5-year dollar swap spread

4.00

0.25

U.S. 10-year dollar swap spread

-1.75

0.25

U.S. 30-year dollar swap spread

-46.00

0.25

(Reporting by Karen Brettell; editing by Jonathan Oatis)

((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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