* U.S. Treasury announces 2-year, 5-year, 7-year auctions * U.S. TIPS auction show mixed results * U.S. yield curve flatter going into month-end (Adds new comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, May 21 (Reuters) - U.S. long-dated Treasury prices inched higher on Thursday in choppy trading, as investors were relieved that the flood of debt supply from the government to finance its stimulus programs was absorbed in the market fairly smoothly. That said, the front-end of the curve has been under mild pressure amid a record $127 billion in supply for U.S. two-year, five-year, and seven-year notes. "The supply, with additional bills, notes, bonds, has all been well-received overall even though the Federal Reserve has trimmed its purchases," said Justin Lederer, Treasury analyst, at Cantor Fitzgerald in New York. Wednesday's auction of $20 billion of U.S. 20-year bonds, the first such sale since 1986, was considered a success even though the yield came just a little higher than market expectations at the bid deadline. Analysts also said investor buying going into the month-end next week also boosted longer-dated Treasury prices. "People usually buy duration toward the month-end extension so that brings some flattening bias," said Zhiwei Ren, portfolio manager, at Penn Mutual Asset Management in Philadelphia. "I have been seeing a lot of dealers putting on flatteners today because the dealers know that fund managers will come and buy the 30-year to extend duration." The yield curve was flatter on Thursday, with the spread between the 10-year and two-year, as well as the five-year and 30-year, narrowing to 50 basis points, and 105 basis points, respectively. On Thursday, the Treaury sold $12 billion in 10-year TIPS (Treasury Inflation Protected Securities) and the results were mixed. The note was awarded at a yield of -0.47%, compared with -0.51% at the bid deadline, suggesting investors demanded a premium to buy the paper. There was decent demand though from indirect bidders, which include foreign central banks, taking up 62.1% of bids accepted. In afternoon trading, U.S. 10-year yields were at 0.678% from 0.679% late on Wednesday. U.S. 20-year bonds traded at 1.163%, from 1.187% on Wednesday. May 21 Thursday 3:04PM New York / 1904 GMT Price Current Net Yield % Change (bps) Three-month bills 0.1275 0.1297 0.006 Six-month bills 0.145 0.1471 -0.003 Two-year note 99-234/256 0.1694 0.008 Three-year note 99-188/256 0.2144 0.005 Five-year note 100-42/256 0.3415 0.012 Seven-year note 99-220/256 0.5206 0.003 10-year note 99-124/256 0.6785 -0.001 30-year bond 96-100/256 1.3978 0.000 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.50 0.00 spread U.S. 3-year dollar swap 5.50 0.25 spread U.S. 5-year dollar swap 3.00 0.00 spread U.S. 10-year dollar swap -1.50 0.50 spread U.S. 30-year dollar swap -46.50 1.25 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by David Gregorio and Chizu Nomiyama)
Our Standards: The Thomson Reuters Trust Principles.