July 9, 2020 / 2:04 PM / a month ago

TREASURIES-More strong demand expected for U.S. debt at auction

    By Ross Kerber
    July 9 (Reuters) - Stable U.S. Treasury yields on Thursday
set the stage for upcoming bond auction results to show
continued high demand for the safe-haven government debt despite
the spreading COVID-19 pandemic.
    The Treasury department will give details in the early
afternoon on the sale of $19 billion worth of 30-year bonds
    In two previous auctions this week the U.S. sold debt at
record low yields, as issuance soars to fund economic stimulus
in response to the coronavirus.
    "There's tremendous interest in adding high-quality duration
right now," said Michael Lorizio, senior fixed income trader for
Manulife Investment Management.
    The benchmark 10-year yield was down a basis
point in morning trading at 0.643%.
    Wall Street opened higher after data pointed to a declining
trend in weekly jobless claims, with investors also weighing the
risk of another business shutdown as U.S. COVID-19 cases
    The Labor Department's most timely data on the economy
showed 1.31 million Americans filed for state unemployment
benefits in the latest week, down from 1.43 million claims in
the prior week. It also fared better than economists' estimates
of 1.38 million claims.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, seen as an indicator of economic
expectations, was at 49 basis points. That was about a basis
point lower than Wednesday's close and in line with its level
since mid-June.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was up less than
a basis point at 0.1567% in morning trading.
      July 9 Thursday 9:51AM New York / 1351 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.14         0.1424    -0.005
 Six-month bills               0.155        0.1573    -0.003
 Two-year note                 99-240/256   0.1567    0.002
 Three-year note               99-212/256   0.1825    0.001
 Five-year note                99-206/256   0.2896    -0.001
 Seven-year note               100-32/256   0.4817    -0.007
 10-year note                  99-212/256   0.643     -0.010
 20-year bond                  99-176/256   1.1426    -0.014
 30-year bond                  96-232/256   1.3767    -0.015
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         5.50        -0.50    
 U.S. 3-year dollar swap         3.75        -0.25    
 U.S. 5-year dollar swap         2.50         0.00    
 U.S. 10-year dollar swap       -3.00         0.25    
 U.S. 30-year dollar swap      -49.25         0.25    
 (Reporting by Ross Kerber in Boston
Editing by Nick Zieminski)
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