June 12, 2020 / 6:58 PM / a month ago

TREASURIES-Yields head higher as stocks rebound

 (Updates yields, adds analyst comment)
    By Karen Pierog
    CHICAGO, June 12 (Reuters) - U.S. Treasury yields rose on
Friday as stocks clawed back some ground from Thursday's biggest
one-day drop in about three months. 
    The benchmark 10-year yield was last up 3.9
basis points at 0.6919%. 
    "It's a seesaw between optimism in the equity market and
pessimism in the bond market and that switches some times," said
Gary Pollack, managing director, fixed income at Deutsche Bank
Private Wealth Management in New York. "So Treasuries have been
on a seesaw ride, but I'd call it a rather narrow seesaw ride."
    There is potential for the 10-year yield to jump over the
longer term as fears over the coronavirus subside and bigger
swaths of the U.S. economy restart, according to Stan Shipley,
research analyst for Evercore ISI.
    While the yield could hit a range around 1.25% by the end of
the year under current conditions and with no change in Federal
Reserve policy or guidance, Shipley said, the Fed would likely
step in to keep rates low to "really heal the economy."
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last up 1
basis point at 0.189%.
   A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, which is viewed as an indicator of
economic expectations, was at 50.10 basis points, about 3 basis
points higher than at Thursday's close. It reached 72 basis
points a week ago, the steepest since March, after data showed
the U.S. economy unexpectedly added jobs in May. 
   Bids submitted in a Friday morning overnight repurchase
agreement operation totaled $49.2 billion, according to the New
York Federal Reserve, which said it accepted all the bids.
    On Thursday, the Fed announced it was slightly raising the
price of the operations after seeing "substantial improvements"
in market conditions.
   June 12 Friday 1:34PM New York / 1834 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.165        0.1678    0.003
 Six-month bills               0.1825       0.1852    0.005
 Two-year note                 99-224/256   0.189     0.010
 Three-year note               100-24/256   0.2186    0.008
 Five-year note                99-166/256   0.3215    0.020
 Seven-year note               99-208/256   0.5275    0.032
 10-year note                  99-92/256    0.6919    0.039
 20-year bond                  98-64/256    1.2243    0.044
 30-year bond                  95-100/256   1.4402    0.037
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         7.25        -0.50    
 U.S. 3-year dollar swap         5.00         0.00    
 U.S. 5-year dollar swap         4.50        -0.50    
 U.S. 10-year dollar swap       -1.25        -0.25    
 U.S. 30-year dollar swap      -48.25        -0.25    

 (Reporting by Karen Pierog; Editing by Leslie Adler)
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