July 13, 2018 / 3:11 PM / 4 months ago

TREASURIES-U.S. yield curve flattest in 11 years as bond prices rise

    * Treasuries continue narrow trading range
    * Bid for European government bonds helps support U.S. debt

    By James Thorne
    NEW YORK, July 13 (Reuters) - The yield curve on U.S.
Treasuries once again reached its flattest level in 11 years on
Friday in low-volume trading.
    The spread between 2-year and 10-year Treasury notes fell to
24.46 basis points, continuing a persistent downward trend since
early June.
    "Every day it's another basis point tighter in 2s to 10s. I
can't recall a time where it's really just been so day in and
day out consistent in that trading theme," said Guy LeBas, chief
fixed income strategist at Janney Montgomery Scott LLC in
Philadelphia.
    Treasury prices rose in unison on Friday. The yield on
benchmark U.S. 10-year notes was 2 basis points
lower at 2.832 percent.
    Rising bond prices in Europe helped to support Treasury
demand, analysts said. The safe-haven bid appeared to be spurred
by U.S. President Trump's criticism of UK Prime Minister Theresa
May's Brexit strategy, saying it killed hopes of a U.S. trade
deal.
    "The most important thing we're seeing here is a long-term
very narrow range trade," said John Canavan, market strategist
at Stone & McCarthy Research Associates in New York.
    U.S. 10-year notes have traded between 2.807 and 2.884
percent during the past two weeks, which Canavan said was a
"very narrow range."
    Markets were looking forward to upcoming commentary from the
Federal Reserve. Fed Chairman Jerome Powell will give his
semiannual testimony on the economy and monetary policy before
the Senate Banking Committee next Tuesday.
    The Fed's Bank of Atlanta President Raphael Bostic will
speak on Friday at 12:30 p.m. (1630 GMT) before the Northern
Chapter Virginia Society of Certified Public Accountants.

    July 13 Friday 10:47AM New York / 1447 GMT
                               Price                  
 US T BONDS SEP8               145-22/32    13/32     
 10YR TNotes SEP8              120-88/256   6/32      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.9375       1.9737    0.000
 Six-month bills               2.1125       2.1644    -0.001
 Two-year note                 99-216/256   2.582     -0.012
 Three-year note               99-228/256   2.6632    -0.022
 Five-year note                99-130/256   2.7317    -0.023
 Seven-year note               99-176/256   2.7996    -0.022
 10-year note                  100-92/256   2.8326    -0.020
 30-year bond                  103-200/256  2.9338    -0.016
         YIELD CURVE           Last (bps)   Net       
                                            Change    
                                            (bps)     
 10-year vs 2-year yield       24.90        -0.70     
 30-year vs 5-year yield       20.10        0.40      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        22.50        -0.75    
 spread                                               
 U.S. 3-year dollar swap        19.50         0.00    
 spread                                               
 U.S. 5-year dollar swap        13.75         0.00    
 spread                                               
 U.S. 10-year dollar swap        6.25        -0.50    
 spread                                               
 U.S. 30-year dollar swap       -4.00        -0.50    
 spread                                               
 


    
 (Reporting by James Thorne; editing by Jonathan Oatis)
  
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