May 21, 2020 / 2:09 PM / 4 days ago

TREASURIES-U.S. long-dated prices rise as markets digest debt supply

    By Gertrude Chavez-Dreyfuss
    NEW YORK, May 21 (Reuters) - U.S. long-dated Treasury prices
rose on Thursday, as investors were relieved that the flood of
debt supply from the government to finance various stimulus
programs during the pandemic has been absorbed in the market
fairly smoothly.
    That said, the front-end of the curve has been under mild
pressure ahead of the U.S. Treasury's announcement on auction
sizes for two-year, five-year, and seven-year notes, as well as
the sale of $12 billion in reopened 10-year TIPS.
    "There's a little bit of relief that we got through the sale
of the 10-year, 20-year, and 30-year," said Justin Lederer,
Treasury analyst, at Cantor Fitzgerald in New York. 
    "The supply, with additional bills, notes, bonds, has all
been well-received overall even though the Federal Reserve has
trimmed its purchases."
    Wednesday's auction of $20 billion in 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 bonds were also well-bid as global
equities fell amid growing tension between the United States and
China on the origin of the novel coronavirus.
    U.S. Secretary of State Mike Pompeo rejected on Wednesday
President Xi Jinping's claim that Beijing had acted with
transparency after the outbreak in China, and said if Xi wanted
to show that, he should hold a news conference and allow
reporters to ask him anything they liked.
    In morning trading, U.S. 10-year yields was at
0.678% from 0.679% late on Wednesday.
    A day after its maiden sale in more than three decades, U.S.
20-year bonds traded at 1.165%, from 1.187% on
Wednesday.
    Yields on U.S. 30-year bonds were at 1.390%,
down from 1.398% on Friday. 
    The yield curve flattened on Thursday, with the spread
between the 10-year and two-year narrowing to 50 basis points
.
    
      May 21 Thursday 9:59 AM New York / 1359 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.12         0.122     -0.002
 Six-month bills               0.14         0.142     -0.008
 Two-year note                 99-233/256   0.1714    0.010
 Three-year note               99-186/256   0.2171    0.008
 Five-year note                100-44/256   0.3399    0.010
 Seven-year note               99-224/256   0.5184    0.000
 10-year note                  99-140/256   0.672     -0.007
 30-year bond                  96-184/256   1.3841    -0.014
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         8.25        -0.25    
 spread                                               
 U.S. 3-year dollar swap         5.25         0.00    
 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      -46.75         1.00    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by David
Gregorio)
  
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