April 24, 2020 / 6:51 PM / a month ago

UPDATE 1-TREASURIES-Yields steady as investors stick with riskier assets

 (Updates with market activity, analyst comment)
    By Ross Kerber
    BOSTON, April 24 (Reuters) - U.S. Treasury yields were
little changed on Friday as investors stuck with riskier assets
like stocks despite dim prospects of a quick economic rebound
after the novel coronavirus outbreak. 
    The benchmark 10-year yield was down one basis
point at 0.6008%.
    "It's anchored in," said Michael Lorizio, senior fixed
income trader for Manulife Investment Management. 
    It could be years before the Federal Reserve looks to raise
interest rates again, he said. The U.S. central bank cut rates
three times last year, and it has reduced its overnight
benchmark lending rate to near zero because of the pandemic.
    While investors do not expect a quick economic comeback as
the pandemic plays out, they are willing to hold enough
longer-term assets like stocks and corporate debt to keep the
yields on ultra-safe U.S. treasuries stable for now.
    "There's still enough support for risk assets," Lorizio
said. 
    Major U.S. stock indexes were up about 1 percent in
afternoon trading. 
    The U.S. death toll from COVID-19, the respiratory illness
caused by the coronavirus, topped 50,000 on Friday as Georgia,
Oklahoma and a handful of other states took the first tentative
steps at reopening for business, despite the disapproval of
President Donald Trump and health experts.
    Stan Shipley, macro research analyst for Evercore ISI, said
investors will watch to see health data from early-opening
states to learn whether they acted too quickly. 
    "I think the market is kind of stuck here. I don't think it
will move far from here until we see that we can reopen the
economy" safely, Shipley said.
    After passing $3 trillion of coronavirus relief in a rare
run of bipartisanship, Republicans and Democrats in the U.S.
Congress girded for a new battle over federal assistance to
states and local governments grappling with the deadly
outbreak.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, seen as an indicator of economic
expectations, was at 38 basis points, within a basis point of 
its close on Thursday.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down less
than a basis point at 0.2144%.
    
      April 24 Friday 2:36PM New York / 1836 GMT
                               Price                  
 US T BONDS JUN0               181-24/32    0-11/32   
 10YR TNotes JUN0              139-20/256   0-16/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.12         0.122     0.013
 Six-month bills               0.1425       0.1446    0.000
 Two-year note                 100-79/256   0.2144    -0.005
 Three-year note               99-248/256   0.2606    -0.005
 Five-year note                100-172/256  0.3623    -0.007
 Seven-year note               100-196/256  0.5123    -0.004
 10-year note                  108-140/256  0.6008    -0.010
 30-year bond                  120-80/256   1.1886    -0.014
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        16.25        -1.75    
 spread                                               
 U.S. 3-year dollar swap        10.75        -0.75    
 spread                                               
 U.S. 5-year dollar swap         7.25        -0.50    
 spread                                               
 U.S. 10-year dollar swap        2.50        -1.00    
 spread                                               
 U.S. 30-year dollar swap      -43.00        -2.25    
 spread                                               
 
 (Reporting by Ross Kerber in Boston
Editing by Paul Simao and Jonathan Oatis)
  
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