(Recasts, updates yields, adds comments from analyst and
Pelosi)
By Karen Pierog
CHICAGO, Aug 18 (Reuters) - U.S. Treasury yields drifted
lower on Tuesday as the market looked ahead to an auction of
20-year bonds and the release of Federal Reserve meeting
minutes.
The benchmark 10-year yield was last down 1.3
basis points at 0.6704%.
Gennadiy Goldberg, an interest rate strategist at TD
Securities in New York, said the market was in a "grinding
rally" as it awaited Wednesday's $25 billion bond auction and
the minutes from the Fed's July meeting.
"The market is hoping for a good 20-year auction tomorrow,
probably thinking the Fed remains dovish in the minutes as
well," Goldberg said.
Collin Martin, fixed income strategist at the Schwab Center
for Financial Research in New York, said Treasuries were range
bound due to "summer doldrums" and a political stalemate over a
new round of federal aid to bolster the coronavirus-hit economy.
U.S. House of Representatives Speaker Nancy Pelosi said on
Tuesday that Democrats in Congress are willing to cut their
relief bill in half to get an agreement on new legislation with
the White House and Republicans.
After selling Treasuries for three straight months,
foreigners became buyers of the government's notes and bonds in
June, according to Treasury Department data on Monday.
"There could be a pick up in foreign demand as people are
still looking for high-quality, liquid investments in a world
where yields are still very, very low," Martin said.
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 last at 52.40 basis points, about a
basis point lower than at Monday's close.
August 18 Tuesday 1:57PM New York / 1857 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 0.105 0.1065 -0.002
Six-month bills 0.12 0.1217 0.000
Two-year note 99-246/256 0.1451 -0.006
Three-year note 99-220/256 0.1722 -0.011
Five-year note 99-220/256 0.2786 -0.006
Seven-year note 99-80/256 0.4757 -0.007
10-year note 99-144/256 0.6704 -0.013
20-year bond 99-132/256 1.1525 -0.025
30-year bond 99-92/256 1.4012 -0.023
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 7.50 0.00
spread
U.S. 3-year dollar swap 6.00 0.25
spread
U.S. 5-year dollar swap 4.50 -0.50
spread
U.S. 10-year dollar swap -1.75 -0.25
spread
U.S. 30-year dollar swap -41.25 0.25
spread
(Reporting by Karen Pierog; Editing by Will Dunham)
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