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Bonds News

TREASURIES-U.S. yields mixed as markets consolidate amid COVID worries

* U.S. 2-year/10-year yield curve steepens

* Total COVID-19 cases surge again

* Near-term risk for yields tilted to upside - analyst

* Fed likely to do more, to keep lid on rates - analyst (Adds new comment, updates prices)

NEW YORK, Nov 13 (Reuters) - U.S. Treasury yields were narrowly mixed on Friday in a choppy session after trading lower for most of the week, as investors consolidated positions ahead of the weekend and remained cautious overall given the surge in coronavirus cases.

The yield curve, one indicator of risk sentiment, steepened on Friday, after flattening the previous session, with the spread between two-year and 10-year notes widening to 71.6 basis points.

Total COVID-19 cases across the United States hit an all-time daily high for a third straight day on Thursday, reaching at least 160,000, and crossing the 100,000 mark for a ninth consecutive day, Reuters data showed. Total U.S. coronavirus cases hit 10.58 million, with the death toll rising to 242,979.

COVID-19 concerns have kept a lid on rates despite positive vaccine news from Pfizer.

Federal Reserve Chairman Jerome Powell has expressed concern about the surge in coronavirus cases and on Thursday repeated his view that more action from both the Federal Reserve and from Congress, in the form of further fiscal stimulus, will likely be needed.

“It’s increasingly likely that the Fed either announces shifting maturities to buy longer-term Treasuries or it announces an expanded purchase program with more discrete parameters,” said Bill Merz, director of fixed income at U.S. Bank Wealth Management in Minneapolis.

“That’s one more thing that should support the recovery over the long run and help keep longer-term bond yields from running away from here. It should prevent rates from shooting significantly higher,” he added.

In afternoon trading, U.S. benchmark 10-year yields were up at 0.896%, from 0.886% late on Thursday.

Ten-year yields crept higher as U.S. stocks advanced on Friday.

“The risk going forward is still to the upside for yields as markets become comfortable with developments over the next week or two,” said Zachary Griffiths, macro strategist at Wells Fargo. “We see a short-term range of 85 basis points to 1% on the 10-year over the next two months,”

U.S. 30-year yields were slightly lower at 1.648% from Thursday’s 1.652%.

On the front end of the curve, U.S. two-year yields were slightly up at 0.179% from 0.177% on Thursday.

Friday’s data showing slightly better-than-expected producer prices and darkening consumer sentiment had little impact on the Treasury debt market.

U.S. producer prices increased a bit more than expected in October to 0.3%, while the University of Michigan’s consumer sentiment index dropped to 77 early this month from a final reading of 81.8 in October. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Kirsten Donovan and Sonya Hepinstall)

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