Bonds News

TREASURIES-Yield higher after soft 10-year auction

 (Adds 10-year auction results, quote, updates prices)
    By Karen Brettell
    NEW YORK, Sept 9 (Reuters) - U.S. Treasury yields rose on
Wednesday after the government sold $35 billion in 10-year notes
to slightly soft demand, and ahead of a 30-year bond auction on
    The 10-year notes sold at a high yield of 0.704%, around one
basis point higher than where the debt traded before the
    “The auction was a little weaker than expected,” said Justin
Lederer, an interest rate strategist at Cantor Fitzgerald in New
York. “I’m not completely surprised by the tail just given some
of the short base, there was a lot of short covering that went
on and that took away some of the bid.”
    Treasury yields have been choppy as investors weigh equity
volatility, which has boosted demand for the safe-haven debt,
against heavy debt supply.
    But benchmark 10-year notes have for the most part held in a
tight range since the beginning of April as the Federal Reserve
keeps interest rates zero bound and continues its bond
    The yield rose 2 basis points to 0.703% on
    The Treasury has been increasing the size of its auctions
across the curve as it pays for stimulus meant to boost the
economy after coronavirus lockdowns.
    The next focus will be the Treasury’s sale of $23 billion in
30-year bonds on Thursday, after the government saw weak demand
for a record-large sale of the bonds at its August refunding.
The sale is up from $19 billion at July's reopening but below
the $26 billion sold last month.
    The Treasury on Thursday will also announce the size of its
20-year bond auction scheduled for next week.
    Another major focus is whether the U.S. Congress is likely
to pass new stimulus to boost the economy after the spread of
the novel coronavirus closed businesses across the country.
    If new spending is not imminent it could boost demand for
Treasuries, as the threat of further increases in supply in the
near term would ease. At the same time, concerns about further
economic weakness would grow.
    “That is 1-1.5 trillion dollars of supply that won’t hit the
market, and that’s quite a bit of fiscal drag as well,” said
Gennadiy Goldberg, an interest rate strategist at TD Securities
in New York.
    U.S. Senate Republican and Democratic leaders on Wednesday
held to their radically different positions on what is needed to
address the continuing fallout from the coronavirus pandemic,
one day before a vote on a modest Republican bill that appeared
destined for defeat.
  September 9 Wednesday 3:00PM New York / 1900 GMT
 US T BONDS DEC0               175-22/32    -0-19/32  
 10YR TNotes DEC0              139-68/256   -0-32/25  
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.11         0.1116    -0.007
 Six-month bills               0.125        0.1268    -0.002
 Two-year note                 99-246/256   0.1449    0.004
 Three-year note               99-220/256   0.172     0.001
 Five-year note                99-220/256   0.2785    0.006
 Seven-year note               100-32/256   0.4817    0.013
 10-year note                  99-64/256    0.7033    0.019
 20-year bond                  97-208/256   1.2493    0.035
 30-year bond                  97-244/256   1.4596    0.037
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         8.25         0.00    
 U.S. 3-year dollar swap         6.75        -0.25    
 U.S. 5-year dollar swap         6.00         0.00    
 U.S. 10-year dollar swap        0.25         0.25    
 U.S. 30-year dollar swap      -38.00         0.25    
 spread (Reporting by Karen Brettell; Editing by Nick Zieminski and
Leslie Adler)