May 5, 2020 / 1:52 PM / a month ago

TREASURIES-Yields rise on improving risk appetite, looming supply

    By Karen Brettell
    NEW YORK, May 5 (Reuters) - U.S. Treasury yields rose as
plans to reopen major economies boosted risk appetite on
Tuesday, a day after the Treasury Department announced that it
would borrow a record amount of almost $3 trillion this quarter.
    Italy and the United States were among a slew of countries
tentatively easing coronavirus lockdowns on Monday to revive
economies as global deaths surpassed a quarter of a million.

    "Whether its short-term or long-term hope, you're starting
to see some economies reopen," said Justin Lederer, an interest
rate strategist at Cantor Fitzgerald in New York.
    Longer-dated debt also underperformed on Tuesday, a day
before the Treasury is scheduled to give details of next week’s
auctions of three-, 10- and 30-year debt, which are likely to be
increased in size.
    "I wouldn't be surprised if we saw a little bit of a backup
into the refunding next week," said Lederer. "Expectations will
be for higher coupon issuance and a 20-year."
    The U.S. Treasury Department on Monday said it plans to
borrow nearly $3 trillion in the second quarter - more than five
times larger than the previous record - as the federal
government spends at a frantic pace to mitigate the impact of
the coronavirus outbreak on the economy.
    Additional details of Treasury's quarterly refunding will be
announced at 8:30 a.m EDT (1230 GMT) on Wednesday. In February,
Treasury said it would announce details of a planned new 20-year
bond in May.
    Benchmark 10-year yields rose three basis points
to 0.665%.
    The yield curve between two-year and 10-year notes
 steepened three basis points to 48 basis points.
    Thirty-year bond yields rose four basis points
to 1.333%.
    Heavy corporate debt supply also weighed on the Treasury
market on Tuesday.
    May 5 Tuesday 9:31AM New York / 1331 GMT
 US T BONDS JUN0               179-29/32    -0-26/32  
 10YR TNotes JUN0              138-196/256  -0-52/25  
                               Price        Current   Net Change
                                            Yield %   (bps)
 Three-month bills             0.12         0.122     0.008
 Six-month bills               0.14         0.1424    0.005
 Two-year note                 99-225/256   0.1862    0.004
 Three-year note               100-2/256    0.2473    0.010
 Five-year note                100          0.375     0.017
 Seven-year note               99-176/256   0.5457    0.023
 10-year note                  107-228/256  0.6651    0.028
 30-year bond                  116-92/256   1.3326    0.036
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        12.50         0.00    
 U.S. 3-year dollar swap         7.25        -0.50    
 U.S. 5-year dollar swap         3.75        -0.25    
 U.S. 10-year dollar swap       -0.75         0.00    
 U.S. 30-year dollar swap      -47.75        -0.25    

 (Reporting by Karen Brettell
Editing by Paul Simao)
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