October 23, 2019 / 8:47 PM / 25 days ago

TREASURIES-U.S. yields recover from lows, end little changed

    * EU keeps UK waiting on Brexit delay
    * Treasuries tracking Bunds, Gilts
    * U.S. 5-year note auction showed solid demand

 (Recasts, adds new comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Oct 23 (Reuters) - U.S. Treasury yields recovered
from session lows to close little changed on Wednesday in
generally thin trading, as investors consolidated positions amid
an overall lack of new catalysts to spur the market in either
direction.
    Early in the session, U.S. yields were lower, in line with
German Bunds and UK Gilts, as investors grew more concerned
about persistent uncertainty surrounding Britain's long-delayed
exit from the European Union. U.S. yields regained ground,
however, and buying waned as the session wore on.
    "The rally in Bunds and Gilts was not that substantial
anyway and that just kind of trickled down. It was kind of this
grind lower for the rest of the day," said Justin Lederer,
Treasury trader at Cantor Fitzgerald in New York.
    "We're also kind of consolidating here. We have kind of
taken out this trade fear, as concerns on this front have
dissipated a little bit," he added.
    The Treasury market has tracked Brexit in recent weeks and
it will continue to be a factor until it gets resolved, analysts
said.
    British lawmakers on Tuesday signaled their support for the
Brexit deal UK Prime Minister Boris Johnson agreed with the
European Union last week. But that was offset minutes later when
parliament rejected his three-day timetable to rush legislation
through the House of Commons, making ratification of his deal by
the Oct. 31 deadline almost impossible.
    "Everything is back on the suspense file with no
resolution," said Jim Vogel, senior rates strategist, at FTN
Financial in Memphis, Tennessee.  
    EU leaders considered on Wednesday whether to give Britain a
three-month Brexit extension, and Johnson said that if they do
so he would call an election by Christmas.
    In afternoon trading, U.S. 10-year note yields
were steady at 1.769% from 1.766% late on Tuesday. 
    Yields on 30-year bonds were also little changed
at 2.257%, from 2.251% on Tuesday.
    On the short-end of the curve, U.S. two-year yields were
down at 1.585%, from Tuesday's 1.591%.
    Also on Wednesday, the U.S. Treasury's $41 billion five-year
note auction showed strong demand, with a high yield of 1.570%,
lower than the expected yield at the bid deadline.
    The bid-to-cover ratio was 2.41, higher than both the 2.32
ratio from last month and the 2.36 average.
    Post-auction, U.S. five-year yields were at 1.594%
, from 1.592% late on Tuesday.
      October 23 Wednesday 4:31PM New York / 2031 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.625        1.6589    0.000
 Six-month bills               1.605        1.6451    0.000
 Two-year note                 99-212/256   1.5877    -0.003
 Three-year note               99-98/256    1.5882    0.000
 Five-year note                99-140/256   1.5958    0.004
 Seven-year note               99-160/256   1.6825    0.005
 10-year note                  98-180/256   1.7695    0.003
 30-year bond                  99-212/256   2.2579    0.007
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         3.75         2.00    
 spread                                               
 U.S. 3-year dollar swap        -0.50         0.25    
 spread                                               
 U.S. 5-year dollar swap        -2.00         0.00    
 spread                                               
 U.S. 10-year dollar swap       -7.75        -0.50    
 spread                                               
 U.S. 30-year dollar swap      -37.75        -0.75    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Lisa
Shumaker and Chris Reese)
  
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