By Karen Pierog
CHICAGO, June 8 (Reuters) - U.S. Treasury yields were lower
on Monday as the market took a pause from last week's dramatic
rise and ahead of another spate of supply.
The benchmark 10-year yield was last down 2.6
basis points at 0.8785%. Yields spiked on Friday in the wake of
a better-than-expected May unemployment report with the 10-year
note yield rising above 0.9% for the first time since March 20.
"After such a significant move last week, it wouldn't
necessarily be surprising to see a little bit of a breather or
at least a more gradual move here," said Bill Merz, head of
fixed income research at U.S. Bank Wealth Management in
Minneapolis.
Later on Monday, the Treasury will sell $44 billion of
three-year notes as it continues to finance massive stimulus
spending to combat the economic fallout of the coronavirus
outbreak.
Merz said with the Federal Reserve in near-full control of
the front end of the yield curve, the notes should be able to be
"digested relatively easily."
Other sales this week include $29 billion of 10-year notes
on Tuesday and $19 billion of 30-year bonds on Thursday.
Also looming this week is a two-day Fed meeting. While no
major policy decisions are expected, the central bank will issue
its first economic projections since December.
The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last down 1.2
basis points at 0.2043%.
A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes that is seen as an indicator of economic
expectations was at about 67 basis points, roughly 1 basis point
lower than at Friday's close.
Bids submitted in a Monday morning overnight repurchase
agreement (repo) operation totaled $67.05 billion, according to
the New York Federal Reserve, which said it accepted all the
bids. Another $53.2 billion in bids were submitted and accepted
in a 29-day repo operation.
June 8 Monday 9:22 a.m. New York / 1422 GMT
Price
Price Current Net
Yield % Change
(bps)
Three-month bills 0.16 0.1623 0.005
Six-month bills 0.185 0.1883 0.005
Two-year note 99-216/256 0.2043 -0.012
Three-year note 99-148/256 0.2696 -0.024
Five-year note 99-24/256 0.4343 -0.043
Seven-year note 98-196/256 0.6815 -0.036
10-year note 97-152/256 0.8785 -0.026
30-year bond 89-252/256 1.6769 -0.001
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 8.00 -0.25
spread
U.S. 3-year dollar swap 5.25 -0.25
spread
U.S. 5-year dollar swap 4.25 0.25
spread
U.S. 10-year dollar swap -2.00 0.25
spread
U.S. 30-year dollar swap -48.75 0.25
spread
(By Karen Pierog
Editing by Marguerita Choy)
Source: Read Full Article