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Bonds News

TREASURIES -U.S. yields retreat as virus outbreak damages economic data

    * U.S. jobless claims fall from previous week
    * U.S. housing starts, Philly Fed index worse than expected
    * U.S 10-year, 30-year yields fall to two-week lows
    * U.S. 2-year yields drop to fresh three-year low

 (Recasts, adds analyst comment, details, Treasury table,
updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, April 16 (Reuters) - U.S. Treasury yields fell on
Thursday for a third session, pressured by more data showing how
the coronavirus pandemic has choked the world's largest economy,
as debates mounted about reopening businesses in the United
States, the epicenter of the outbreak.
    U.S. 10-year and 30-year yields dropped to two-week lows,
while those on two-year notes slid to a new three-year trough.
The yield curve also continued to flatten.
    Thursday's data showed initial claims for state unemployment
benefits dropped to a seasonally adjusted 5.245 million for the
week ended April 11. Data for the prior week was revised to show
9,000 more applications received than previously reported,
taking the tally for that period to 6.615 million. A total of
22.034 million people have filed claims for jobless benefits
since March 21.
    U.S. housing numbers, meanwhile, were worse than expected,
along with the Philadelphia Fed business conditions index which
was the lowest since 1980.
    U.S. yields were little changed after the data.
    "Everyone knows that the numbers are going to be bad," said
Patrick Leary, chief market strategist, at broker-dealer
Incapital in Chicago. 
    "The question is: how bad does it get and what are our
chances of recovery and when. We're looking at how bad the data
get before it runs the corner. That's why you're not seeing huge
reactions," he added.
    U.S. President Donald Trump on Thursday plans to announce
new guidelines to reopen the economy after a monthlong shutdown
to curb the spread of the novel coronavirus, despite concerns
from health experts, state governors and business leaders about
a potential resurgence of cases in the absence of more testing
and protocols.[ nL2N2C40CH]
    In morning trading, U.S. 10-year yields fell to
0.596%, from 0.641% late on Wednesday. 
    "Since rates are so low, they don't have a lot of room to
rally too hard," said Incapital's Leary. "So we're kind of stuck
in this range of 0.6% to 0.8%."
    Yields on U.S. 30-year bonds were at 1.217%,
down from 1.275% on Wednesday. 
    On the short end of the curve, U.S. two-year yields were
last at 0.190%, down from Wednesday's 0.205%. Earlier in the
session, two-year yields sank to 0.187%, the lowest since April
2017.
    The yield curve flattened for a second straight day on
Thursday, with the spread between the 10-year and two-year
narrowing to 40 basis points, from 43 basis
points on Tuesday. It was the flattest in  more than a week.
     The curve has steepened since the beginning of the outbreak
as investors have piled into short-term debt, having ruled out
rate hikes in the immediate future.
    
      April 16 Thursday 11:07AM New York / 1507 GMT
                               Price                  
 US T BONDS JUN0               181-10/32    0-24/32   
 10YR TNotes JUN0              139-68/256   0-28/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.16         0.1627    0.006
 Six-month bills               0.18         0.1827    -0.012
 Two-year note                 100-90/256   0.1946    -0.010
 Three-year note               100-12/256   0.2343    -0.013
 Five-year note                100-216/256  0.3281    -0.013
 Seven-year note               100-232/256  0.4923    -0.014
 10-year note                  108-128/256  0.6078    -0.033
 30-year bond                  119-144/256  1.2161    -0.059
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        21.50         1.25    
 spread                                               
 U.S. 3-year dollar swap        15.50         1.25    
 spread                                               
 U.S. 5-year dollar swap        12.00        -0.25    
 spread                                               
 U.S. 10-year dollar swap        6.50         0.00    
 spread                                               
 U.S. 30-year dollar swap      -38.00        -1.00    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss
Editing by Bernadette Baum)
  
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