June 2, 2020 / 7:21 PM / a month ago

TREASURIES-Longer-term yields higher on supply expectations

 (Updates with market activity, analyst comment)
    By Ross Kerber
    BOSTON, June 2 (Reuters) - Longer-term U.S. Treasury yields
were higher on Tuesday as investors looked for more bonds to be
issued in response to the ongoing economic crisis.
    The benchmark 10-year yield was up 1.8 basis
point at 0.6803%. 
    In addition, the part of the yield curve measuring the gap
between yields on 5- and 30-year Treasuries was
at 116 basis points, its highest since early 2017. 
    The steepening reflected more U.S. bonds being sold to
finance massive stimulus efforts, said Kim Rupert, senior
economist for Action Economics. The dynamic has also helped
stocks recover, she said.
    "A steepening curve does give equities a bit of a kick," she
said.
    U.S. stocks posted modest gains on Tuesday as market
participants looked past widespread social unrest and pandemic
worries to focus instead on lifting lockdown restrictions and
signs of economic recovery.
    The two-year U.S. Treasury yield was up 1 basis
point at 0.1682%.
    The note typically moves in step with interest rate
expectations, and few expect Fed officials to make dramatic
changes soon.
    Traders are watching if the Fed will take steps like "yield
curve control," or the setting of yield targets for some
Treasuries, said Eric Jussaume, director of fixed income for
Cambridge Trust.
    Fed officials have said yield curve control is one tool they
are evaluating to maintain the economy amid the COVID-19
pandemic.
    "Nobody wants to run ahead of the central bank on this
topic," Jussaume said.
    
  June 2 Tuesday 3:06PM New York / 1906 GMT
                               Price                  
 US T BONDS SEP0               177-10/32    -0-14/32  
 10YR TNotes SEP0              138-220/256  -0-40/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.15         0.1521    -0.003
 Six-month bills               0.175        0.1781    0.003
 Two-year note                 99-234/256   0.1682    0.010
 Three-year note               99-194/256   0.2074    0.013
 Five-year note                99-168/256   0.3195    0.018
 Seven-year note               99-228/256   0.516     0.016
 10-year note                  99-120/256   0.6803    0.018
 30-year bond                  94-112/256   1.4806    0.026
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         8.00        -0.75    
 spread                                               
 U.S. 3-year dollar swap         5.50        -0.75    
 spread                                               
 U.S. 5-year dollar swap         4.25        -1.00    
 spread                                               
 U.S. 10-year dollar swap       -1.25        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -49.25        -0.75    
 spread                                               
 
 (Reporting by Ross Kerber in Boston; editing by Jonathan Oatis
and Nick Zieminski)
  
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