March 10, 2020 / 7:38 PM / 21 days ago

TREASURIES-U.S. Treasury yields head higher with talk of economic stimulus

 (Adds three-year note auction results, analyst comments)
    By Karen Pierog
    CHICAGO, March 10 - U.S. Treasury yields on Tuesday rose
from all-time lows as global oil and stock markets rebounded
after huge losses on Monday fueled by an oil price war and
growing concerns over the economic impact of the coronavirus.
    The 10-year note yield was last at 0.775%, well
above its new record low of 0.318%.
    "You do have some further talk of fiscal stimulus in the
United States and Europe and Japan that's giving some
confidence," said Stan Shipley, fixed income strategist at
Evercore ISI in New York.
    U.S. stock indices were higher on stimulus hopes, recovering
some of the losses they suffered during Monday's biggest one-day
percentage fall.
    President Donald Trump and Republican lawmakers discussed
stimulus plans to bolster the economy on Tuesday afternoon. At
an earlier White House meeting with healthcare executives, Trump
said his administration intended to help airlines and the cruise
line industry.
    Oil also regained some losses from its biggest one-day
decline since the Gulf War in 1991, as the possibility of
economic stimulus encouraged buying and Russia signaled that it
may yet hold talks with OPEC about cooperation on output
cuts.
    Thirty-year Treasury yields, which fell to a record low of
0.702% on Monday, last traded at 1.272%.
    After tumbling to a 5-1/2-year low of 0.251% on Monday,
two-year Treasury yields were trading at 0.483%.
    The Treasury Department saw soft demand for a $38 billon
sale of three-year notes, with especially weak interest from
direct bidders. These include large central banks such as
China's and Japan’s, and some fund managers. 
   Direct bidders took only 3.71% of the sale, while indirect
bidders took 52.26% and dealers bought 44.03% of the notes.

    The Treasury will also sell $24 billion of 10-year notes on
Wednesday and $16 billion of 30-year bonds on Thursday.
   "If there is kind of tepid demand, maybe that leads to yields
moving a little higher," said Collin Martin, a fixed income
strategist at Schwab Center for Financial Research in New York.
    "Given that our yields, at their very, very low level, are
still positive and above those of places like Japan and Germany,
that's likely to keep demand pretty strong," Martin added.
    
    March 10 Tuesday 2:06PM New York / 1906 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.42         0.4275    0.039
 Six-month bills               0.41         0.4177    0.047
 Two-year note                 101-66/256   0.4827    0.136
 Three-year note               102-84/256   0.5729    0.198
 Five-year note                102-100/256  0.6356    0.210
 Seven-year note               102-144/256  0.747     0.236
 10-year note                  106-236/256  0.7745    0.277
 30-year bond                  118-20/256   1.2719    0.334
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         6.25        -6.00    
 spread                                               
 U.S. 3-year dollar swap         2.00        -9.25    
 spread                                               
 U.S. 5-year dollar swap         5.00        -5.25    
 spread                                               
 U.S. 10-year dollar swap        3.25        -6.00    
 spread                                               
 U.S. 30-year dollar swap      -41.50       -10.00    
 spread                                               
 
 (By Karen Pierog in Chicago and Karen Brettell in New York;
Editing by David Gregorio and Will Dunham)
  
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