Yields steady despite soaring U.S. jobless claims

Credit: REUTERS/THOMAS WHITE

By Ross Kerber

BOSTON, April 2 (Reuters) - U.S. Treasuries shrugged off a record rise in jobless claims shown in data on Thursday, leaving yields steady as investors tried to gauge when the coronavirus pandemic's economic impact might peak.

The benchmark 10-year US10YT=RR yield was down 1.6 basis points at 0.6189% in afternoon trading.

That was close to where it stood at 8:30 a.m. EDT (1230 GMT), when the U.S. Labor Department reported the number of Americans filing claims for unemployment benefits last week shot to a record high for a second week in a row - more than 6 million.

More jurisdictions enforced stay-at-home measures to curb the pandemic, which economists say has pushed the economy into recession.

A closely watched portion of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes was at 39 basis points, about 2 basis points higher than Wednesday's close.

Major Wall Street indexes were up on hopes of a truce between major oil producers, also helping stabilize yields.

Analysts contacted by Reuters said the market reaction suggested the jobless numbers were so big that they were hard to fit into traditional models.

"The bad data is being priced in. We know that a large part of the economy is shutting down, so maybe people just expected an outlandish number," said Priya Misra, head of global rates strategy at TD Securities in New York.

"Now the market is more focused on the length of time the shutdown will last," she said.

Bond market investors are starting to absorb a growing supply of Treasury securities meant to pay for a new $2.2 trillion federal aid package, though the exact mix of securities the department will issue is not yet clear.

The two-year US2YT=RR U.S. Treasury yield was down less than a basis point at 0.2255% in afternoon trading. It reached as low as 0.202% overnight, its lowest level since 2013.

However it is affected by the new Treasury supply, the yield on the two-year typically moves in step with interest rate expectations. The Fed has already cut its target interest rate range to nearly zero and most analysts do not see that changing soon in the face of the worsening pandemic, bringing the yield down.

"Barring a big uptick in inflation, it's likely they will stay there two years," said Guy LeBas, chief fixed income strategist for Janney Montgomery Scott.

April 2 Thursday 3:47PM New York / 1947 GMT

Price

US T BONDS JUN0 UScv1

181-21/32

0-17/32

10YR TNotes JUN0 TYcv1

138-240/256

-0-12/256

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.0925

0.0941

0.020

Six-month bills US6MT=RR

0.14

0.142

0.008

Two-year note US2YT=RR

100-76/256

0.2255

-0.008

Three-year note US3YT=RR

100-162/256

0.2843

0.005

Five-year note US5YT=RR

100-144/256

0.3861

0.017

Seven-year note US7YT=RR

100-168/256

0.5293

0.000

10-year note US10YT=RR

108-108/256

0.6189

-0.016

30-year bond US30YT=RR

118-116/256

1.257

-0.032

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

23.25

-0.50

U.S. 3-year dollar swap spread

14.75

-1.00

U.S. 5-year dollar swap spread

11.50

-1.25

U.S. 10-year dollar swap spread

4.75

-1.75

U.S. 30-year dollar swap spread

-42.25

-0.75

(Reporting by Ross Kerber in Boston; editing by Matthew Lewis and Grant McCool)

((ross.kerber@thomsonreuters.com +1 (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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