June 17, 2020 / 3:51 PM / 2 months ago

TREASURIES-Yields lower as coronavirus cases rise

 (Updates prices)
    By Karen Brettell
    NEW YORK, June 17 (Reuters) - U.S. Treasury yields fell on
Wednesday as new outbreaks of the novel coronavirus boosted
demand for the safe haven debt, and before the Treasury will
auction 20-year bonds for the second time since their
reintroduction last month.
    Optimism over a quick economic recovery has been tempered by
an increase in global cases of the coronavirus, with a new
outbreak in Beijing and a rising tide of cases in U.S. states
that are reopening their economies.
    The Treasury will sell $17 billion in 20-year bonds on
Wednesday as it increases debt to pay for stimulus that is meant
to blunt the effect of the virus on the economy.
    The 20-year bonds are priced attractively relative to
10-year notes and 30-year bonds, which should help demand at the
auction, said Tom di Galoma, a managing director at Seaport
Global Holdings in New York.
    Yields on the 20-year bonds were last at 1.315%,
down from a high of 1.541% on June 5.
    Benchmark 10-year yields have also fallen from
11-week highs reached on June 5 when data showed that employers
unexpectedly added jobs in May.
    They were last at 0.746%, after earlier falling to 0.725%.
The yield curve between two-year and 10-year notes
 was little changed at 55 basis points.
    Bonds also gained a safety bid overnight as tensions between
North Korea and South Korea increased. There have also been
clashes between Indian and Chinese troops at a disputed border
    Data on Thursday showed that U.S. homebuilding increased
less than expected in May, but a strong rebound in permits for
future home construction suggested the housing market was
starting to emerge from the COVID-19 crisis along with the
broader economy.
      June 17 Wednesday 11:35AM New York / 1535 GMT
 US T BONDS SEP0               175-25/32    0-3/32    
 10YR TNotes SEP0              138-136/256  0-24/256  
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.17         0.1724    0.000
 Six-month bills               0.1775       0.1801    -0.008
 Two-year note                 99-221/256   0.1952    -0.008
 Three-year note               100-18/256   0.2264    -0.011
 Five-year note                99-144/256   0.3392    -0.011
 Seven-year note               99-156/256   0.5574    -0.012
 10-year note                  98-216/256   0.7463    -0.008
 20-year bond                  96-176/256   1.3146    0.003
 30-year bond                  92-232/256   1.5472    0.009
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         6.50         0.00    
 U.S. 3-year dollar swap         4.25        -0.25    
 U.S. 5-year dollar swap         4.00        -0.50    
 U.S. 10-year dollar swap       -3.00        -1.00    
 U.S. 30-year dollar swap      -51.25        -1.50    

 (Reporting by Karen Brettell; Editing by Bernadette Baum)
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