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TREASURIES-Traders ready for note auctions, U.S. Fed guidance

 (Updates market activity, adds analyst comment)
    By Ross Kerber
    Aug 24 (Reuters) - Stable U.S. Treasury yields on Monday
showed traders preparing for a week that will include of a
barrage of new supply and possible insight from the Federal
Reserve on how it will support the economy.
    The benchmark 10-year yield was up less than a
basis point at 0.6493% in afternoon trading.
    The yield was roughly in the middle of the range where the
10-year note has traded since late March and indicated investors
were looking ahead to auctions of $148 billion worth of 2-year,
5-year and 7-year notes starting on Tuesday said Ben Jeffery,
BMO Capital Markets rates strategist.
    Remarks from Federal Reserve Chairman Jerome Powell
scheduled for Thursday could shed light on the U.S. central
bank's next steps to promote an economic recovery.
    "People are probably just squaring positions ahead of the
more consequential events later this week," Jeffery said.
    Jack McIntyre, fixed income portfolio manager for Brandywine
Global Investment Management, said despite the upcoming
auctions, U.S. Treasury yields will likely stay close to current
levels until the Fed provides more clarity about its intentions.
    "My view is that the supply doesn't change the trend in the
bond market. I think yields are going to be rangebound," he
said.
    U.S. Republicans formally backed President Donald Trump's
re-election bid on the first of four days of a scaled-back party
convention in Charlotte, North Carolina. Party members are
meeting amid a coronavirus pandemic that has killed more than
176,000 Americans, erased millions of jobs and eroded the
president's standing among voters.
    Wall Street gained on Monday, setting the S&P 500 and the
Nasdaq on track for record closing highs as optimism over
potential medical advances to fight the pandemic helped keep
investors in a buying mood.
    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, a basis point above
Friday's close and well above its recent low of 33 basis points
reached on July 24.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was up less than
a basis point at 0.1554% in afternoon trading. 
    
    August 24 Monday 2:22PM New York / 1822 GMT Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.0925       0.0938    -0.002
 Six-month bills               0.115        0.1167    -0.002
 Two-year note                 99-241/256   0.1554    0.008
 Three-year note               99-216/256   0.1777    0.011
 Five-year note                99-218/256   0.2803    0.008
 Seven-year note               99-104/256   0.4621    0.007
 10-year note                  99-196/256   0.6493    0.009
 20-year bond                  99-204/256   1.1364    0.005
 30-year bond                  100-140/256  1.3527    0.000
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         6.50        -0.75    
 spread                                               
 U.S. 3-year dollar swap         5.75        -0.75    
 spread                                               
 U.S. 5-year dollar swap         4.25        -0.75    
 spread                                               
 U.S. 10-year dollar swap       -1.25        -1.00    
 spread                                               
 U.S. 30-year dollar swap      -38.25        -0.25    
 spread (Reporting by Ross Kerber in Boston; Editing by Will Dunham and
Leslie Adler)
  
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