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Bonds News

TREASURIES-U.S. yields mostly higher, but seen range-bound on COVID fears

    * 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 comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 13 (Reuters) - U.S. Treasury yields were
mostly higher on Friday after trading lower for most of the
week, as investors consolidated positions ahead of the weekend
and remained cautious overall given the surge in novel
coronavirus cases.
    The yield curve, one indicator of risk sentiment, steepened
on Friday, after flattening in the previous session, with the
spread between two-year and 10-year notes widening to 71.20
basis points.
    The U.S. Centers for Disease Control and Prevention (CDC) on
Friday reported 10,508,864 cases of coronavirus, an increase of
194,610 cases from its previous count, and said the number of
U.S. deaths had risen by 1,147 to 242,216.
    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 the Federal Reserve and 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 late afternoon trading, U.S. benchmark 10-year yields
were up at 0.893%, from 0.886% late on Thursday. 
    Ten-year yields crept higher as U.S. stocks advanced on
Friday.
    "Yields will probably edge into a slightly higher range, but
we do not expect a violent sell-off," said Michael Purves, chief
executive officer, at Tallbacken Capital Advisors in a research
note on Friday.
    "A bridge to a post-COVID world is a long one, and likely to
be filled with wobbles. Powell will do his part to stabilize the
bridge."
    He added that U.S. 10-year yields are likely to track a
range of between 0.8% to 1.2% over the next few months.
    U.S. 30-year yields slipped to 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.
    
      November 13 Friday 3:31PM New York / 2031 GMT Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.09         0.0913    0.000
 Six-month bills               0.095        0.0964    -0.005
 Two-year note                 99-229/256   0.1791    0.002
 Three-year note               100-12/256   0.2343    0.002
 Five-year note                99-62/256    0.4046    0.009
 Seven-year note               98-252/256   0.6496    0.010
 10-year note                  99-212/256   0.893     0.007
 20-year bond                  94-248/256   1.418     -0.002
 30-year bond                  99-120/256   1.6475    -0.004
                                                      
   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         0.00    
 spread                                               
 U.S. 5-year dollar swap         5.75         0.00    
 spread                                               
 U.S. 10-year dollar swap       -0.75         0.00    
 spread                                               
 U.S. 30-year dollar swap      -33.75         1.00    
 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Kirsten
Donovan/Sonya Hepinstall/Ken Ferris)
  
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