October 23, 2019 / 3:15 PM / a month ago

TREASURIES-U.S. yields fall for second day, tracking Europe, as Brexit concerns weigh

    By Gertrude Chavez-Dreyfuss
    NEW YORK, Oct 23 (Reuters) - U.S. Treasury yields slid for a
second straight session on Wednesday, in line with Europe, as
investors grew more concerned about persistent uncertainty
surrounding Britain's long-delayed exit from the European Union.
    German 10-year Bund and British government bond
yields fell, pushing Treasury yields lower as well.
    British lawmakers on Tuesday signaled their support for the
Brexit deal UK Prime Minister Boris Johnson agreed with the
European Union last week. But that was offset minutes later when
parliament rejected his three-day timetable to rush legislation
through the House of Commons, making ratification of his deal by
the Oct. 31 deadline almost impossible.
    "We're trading closely with European yields, although
volumes are light right now," said Jim Vogel, senior rates
strategist, at FTN Financial in Memphis, Tennessee. 
    "But we're still looking at Brexit. Everything is back on
the suspense file with no resolution." 
    EU leaders considered on Wednesday whether to give Britain a
three-month Brexit extension, and Johnson said that if they do
so he would call an election by Christmas.
    In late morning trading, U.S. 10-year note yields
 fell to 1.738% from 1.766% late on Tuesday. 
    Yields on 30-year bonds were down at 2.221%,
from 2.251% on Tuesday.
    On the short-end of the curve, U.S. two-year yields were
down at 1.567%, from Tuesday's 1.591%.
    Later on Wednesday, the U.S. Treasury is slated to auction
$41 billion in five-year notes.
    Ahead of the auction, U.S. five-year yields dropped to 1.57%
, from 1.592% late on Tuesday.
    "It's sort of easy to buy 5s at 1.61%," said Vogel of the
upcoming auction. "Anything below 1.58% is an indication that
sentiment for Treasuries is strong and following through on the
good auction on 2s yesterday."
    
      October 23 Wednesday 10:52 AM New York / 1452 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.6225       1.6563    -0.003
 Six-month bills               1.6025       1.6425    -0.002
 Two-year note                 99-219/256   1.5737    -0.017
 Three-year note               99-112/256   1.5692    -0.019
 Five-year note                99-164/256   1.5759    -0.016
 Seven-year note               99-202/256   1.6573    -0.021
 10-year note                  98-236/256   1.745     -0.021
 30-year bond                  100-120/256  2.2283    -0.023
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         3.25         1.50    
 spread                                               
 U.S. 3-year dollar swap        -0.75         0.00    
 spread                                               
 U.S. 5-year dollar swap        -2.25        -0.25    
 spread                                               
 U.S. 10-year dollar swap       -7.50        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -37.50        -0.50    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Lisa
Shumaker)
  
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