for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up

TREASURIES-Prices fall on temporary relief package, decent auction

    * Trump urges bailout for airlines, small businesses
    * U.S. yield curve steepens again
    * U.S. 10-year note auction shows solid numbers

 (Adds auction results, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Oct 7 (Reuters) - U.S. Treasury prices fell on
Wednesday, as investors took comfort in President Donald Trump's
comments urging Congress to pass an airline bailout deal as well
as a stimulus package for small businesses.
    Bond prices also slid after the market continued to price in
a victory for Democratic challenger Joe Biden in next month's
presidential election, and after what analysts described as a
decent outcome for the $35 billion U.S. 10-year note auction on
Wednesday.
    The bid-to-cover, a gauge of demand, was at 2.47, which was
higher than both the 2.30 for the September auction and the 2.41
for the larger new issue in August.
    The market is now looking to the $23 billion U.S. 30-year
bond sale on Thursday.
    U.S. yields recovered following a brief fall late Tuesday
after Trump said he would suspend stimulus talks until after the
election and accused House of Representatives Speaker Nancy
Pelosi of not negotiating in good faith.
    The yield curve also resumed its steepening trend on
Wednesday after flattening the previous session.
    Trump said late on Tuesday Congress should quickly extend
$25 billion in new payroll assistance to U.S. passenger airlines
furloughing thousands of workers as air travel remains down
sharply amid the coronavirus pandemic.
    In a tweet, Trump also urged Congress to approve the $135
billion payroll protection program for small businesses.
    "There's still some potential for relief. Trump's tweeted on
the airline money and the payroll protection program and that's
one reason why we're seeing some risk-on moves," said Justin
Lederer, Treasury trader at Cantor Fitzgerald in New York.
    "In a larger picture, yes, the stimulus could be delayed but
overall it would be ultimately passed. We don't know what it
would look like and it would depend on who wins the election,"
he added
    In early afternoon trading, U.S. 10-year yields
rose to 0.77%, from 0.74% late on Tuesday. Ten-year yields rose
to their highest level since June earlier on Tuesday.
    Yields on U.S. 30-year bonds were at 1.571%, up
from 1.537% the previous session. Earlier on Tuesday 30-year
yields climbed to a four-month peak.
   The yield curve steepened on Wednesday as well, with the
spread between the 10-year and two-year widening to 61.70 basis
points.
    A steeper curve suggests expectations of higher growth and
inflation.
    Biden's widening lead in the polls over Trump less than a
month before the election and the possibility of a Democratic
sweep in Congress have helped the steepening narrative. A
victory for Biden and a Democratic sweep in Congress would mean
higher fiscal spending and more Treasury supply.
    "The idea of a Biden win and a Democratic sweep has helped
steepen the curve. The Biden platform in terms of actual
spending is going to be much bigger than what Trump is
offering," said Rob Robis, chief global fixed income strategist,
at BCA Research.
    
      October 7 Wednesday 1:27PM New York / 1727 GMT Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.0975       0.0989    0.000
 Six-month bills               0.11         0.1116    -0.002
 Two-year note                 99-241/256   0.1547    0.008
 Three-year note               99-198/256   0.2008    0.012
 Five-year note                99-146/256   0.3371    0.022
 Seven-year note               98-212/256   0.5464    0.025
 10-year note                  98-160/256   0.7702    0.030
 20-year bond                  96-92/256    1.3343    0.028
 30-year bond                  95-96/256    1.5696    0.033
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         8.25         0.00    
 spread                                               
 U.S. 3-year dollar swap         7.25        -0.50    
 spread                                               
 U.S. 5-year dollar swap         7.00         0.25    
 spread                                               
 U.S. 10-year dollar swap        2.50         0.50    
 spread                                               
 U.S. 30-year dollar swap      -36.00         1.00    
 spread (Reporting by Gertrude Chavez-; Editing by Stephen Orlofsky and
Richard Chang)
  
for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up