April 23, 2020 / 6:35 PM / in a month

TREASURIES-Investors look past grim U.S. jobless claims report, yields tick down

 (Updates with market activity, analyst comment, Washington
development)
    By Ross Kerber
    BOSTON, April 23 (Reuters) - Longer-term U.S. Treasury
yields were slightly lower on Thursday as investors set aside
the latest grim jobs report to focus on how quickly the U.S.
economy might reopen amid the coronavirus pandemic.
    The benchmark 10-year yield was down 1.8 basis
points at 0.6015%, with shorter-term yields still positive.
    That was even though the Labor Department said 4.427 million
more people applied for unemployment benefits for the first time
last week, bringing the number of Americans seeking such
benefits over the past five weeks to a record 26 million
people.
    Traditionally such poor data would send investors rushing to
buy safety assets like government bonds, driving down their
yields further.
    But amid the broad economic collapse brought on by the
outbreak, investors are much more focused on questions like the
strength of measures taken by officials toward reopening
businesses, such as effective testing and medicines, said Priya
Misra, head of global rates strategy for TD Securities.
    "The market is ignoring all the weak data so far, it's
priced in," Misra said. "We have moved ahead from the second
quarter being awful, it's the third and fourth quarter outlook"
on which investors are focused, she said.
    The U.S. House of Representatives returned to Washington on
Thursday to pass a $484 billion coronavirus relief bill, funding
small businesses and hospitals and pushing the total spending
response to the crisis to an unprecedented nearly $3 trillion.

    A bit of drama at midday came when longer-term yields fell
further as stock indexes pared gains, on a disputed report that
a experimental coronavirus drug flopped in an early
trial.
    The yield on the 30-year bond  fell as low as
1.168% before recovering. 
    "The midday catalyst was equity weakness," said Guy LeBas,
chief fixed income strategist for Janney Montgomery Scott LLC.
    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 37 basis points, about a basis point higher
than at Wednesday's close.
    The two-year  U.S. Treasury yield, which
typically moves in step with interest rate expectations, was up
1 basis point at 0.2211% in afternoon trading.
    
      April 23 Thursday 2:09PM New York / 1809 GMT
                               Price                  
 US T BONDS JUN0               181-23/32    0-24/32   
 10YR TNotes JUN0              139-28/256   0-16/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1125       0.1144    0.010
 Six-month bills               0.1425       0.1446    0.003
 Two-year note                 100-76/256   0.2211    0.010
 Three-year note               99-242/256   0.2685    0.011
 Five-year note                100-166/256  0.3673    0.003
 Seven-year note               100-204/256  0.5079    -0.005
 10-year note                  108-140/256  0.6015    -0.018
 30-year bond                  120-120/256  1.1831    -0.037
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        17.25        -1.50    
 spread                                               
 U.S. 3-year dollar swap        11.25        -1.50    
 spread                                               
 U.S. 5-year dollar swap         7.75        -1.50    
 spread                                               
 U.S. 10-year dollar swap        3.50        -1.25    
 spread                                               
 U.S. 30-year dollar swap      -40.75        -1.50    
 spread                                               
 
    

 (Reporting by Ross Kerber in Boston; editing by Diane Craft)
  
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