US Markets

Yields rise, but stay in tight range as investors weigh COVID risks

Credit: REUTERS/DADO RUVIC

U.S. Treasury yields rose 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 rose 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 rose on Friday 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."

The yield on benchmark 10-year notes US10YT=RR rose two basis points to 0.628%. The yield has 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 steepened one basis point to 48 basis points.

Data on Friday showed that U.S. homebuilding increased in June by the most in nearly four years amid reports of rising demand for housing in suburbs and rural areas as companies allowed employees to work from home during the COVID-19 pandemic.

But a resurgence in new coronavirus infections across the country eroded consumer sentiment in mid-July, other data showed on Friday, threatening the nascent housing and economic recovery.

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 U.S. government and Federal Reserve will spur inflation.

Yields on 10-year TIPS US10YTIP=RR fell to minus 0.84% on Friday. They have dropped from around minus 0.40% in early June.

The U.S. Treasury said on Friday it has asked primary dealers for their input on whether it should make technical adjustments to its Treasury note and bond auction schedules in light of the massive run up in debt issuance to pay for COVID-19 emergency relief programs.

July 17 Friday 3:00PM New York / 1900 GMT

Price

US T BONDS SEP0 UScv1

179-24/32

-0-15/32

10YR TNotes SEP0 TYcv1

139-96/256

-0-28/256

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.115

0.1166

0.003

Six-month bills US6MT=RR

0.13

0.1319

0.000

Two-year note US2YT=RR

99-245/256

0.1471

0.000

Three-year note US3YT=RR

99-218/256

0.1748

0.003

Five-year note US5YT=RR

99-216/256

0.2818

0.007

Seven-year note US7YT=RR

100-56/256

0.4679

0.011

10-year note US10YT=RR

99-248/256

0.6283

0.016

20-year bond US20YT=RR

100-92/256

1.1047

0.026

30-year bond US30YT=RR

98-20/256

1.3282

0.027

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

5.50

0.00

U.S. 5-year dollar swap spread

3.75

0.00

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 and Richard Chang)

((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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