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Yields stay within range as traders eye equity markets

Credit: REUTERS/THOMAS WHITE

U.S. Treasury yields stabilized near the middle of their recent trading ranges on Friday as government-bond investors took their cues from equity markets.

By Ross Kerber

Sept 18 (Reuters) - U.S. Treasury yields stabilized near the middle of their recent trading ranges on Friday as government-bond investors took their cues from equity markets.

The benchmark 10-year US10YT=RR yield was up less than a basis point at 0.6839%.

The level was well within a six-basis point trading range for the note this week and close to where it stood on Wednesday before Federal Reserve officials suggested hike rates could be years away.

The Nasdaq rose at the open on Friday, shaking off a two-day decline in heavyweight technology stocks, while worries about rising coronavirus cases and a patchy economic recovery weighed on the S&P 500 and Dow.

The small movements in Treasuries were likely driven with an eye on stocks, said Subadra Rajappa, head of U.S. rates strategy for Societe Generale.

"There's some squaring off of positions in equities and futures, and that's probably what's driving the cautious tone in the bond market," she said.

The U.S. current account deficit soared to its highest level in nearly 12 years in the second quarter as the COVID-19 pandemic weighed on the exports of goods and services, the Commerce Department said on Friday. The measure of the flow of goods, services and investments jumped 52.9% to $170.5 billion last quarter, its highest since 2008.

Euro zone government bond yields were edging down on Friday as expectations of more policy easing by central banks coupled with persistent concerns about economic recovery underpinned prices.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, US2US10=RR seen as an indicator of economic expectations, was at 55 basis points, roughly unchanged since Thursday's close and well above the recent low of 33 basis points on July 24.

The two-year US2YT=RR U.S. Treasury yield, which typically moves in step with interest rate expectations, was up less than a basis point at 0.1351%.

September 18 Friday 9:31 AM New York / 1331 GMT

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.0875

0.0887

-0.005

Six-month bills US6MT=RR

0.11

0.1116

0.000

Two-year note US2YT=RR

99-251/256

0.1351

0.002

Three-year note US3YT=RR

99-232/256

0.1565

0.000

Five-year note US5YT=RR

99-228/256

0.2723

0.001

Seven-year note US7YT=RR

100-62/256

0.4645

0.000

10-year note US10YT=RR

99-112/256

0.6839

0.002

20-year bond US20YT=RR

98-100/256

1.2163

0.005

30-year bond US30YT=RR

98-148/256

1.4336

0.007

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

7.75

0.00

U.S. 3-year dollar swap spread

7.00

0.25

U.S. 5-year dollar swap spread

5.75

0.25

U.S. 10-year dollar swap spread

0.25

0.00

U.S. 30-year dollar swap spread

-36.50

0.00

(Reporting by Ross Kerber in Boston; Editing by Steve Orlofsky)

((ross.kerber@thomsonreuters.com; (617) 856 4341; Reuters Messaging: Ross.Kerber.Reuters.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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