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Bonds News

TREASURIES-Yields climb as market awaits U.S. election results

    CHICAGO/LONDON, Nov 3 (Reuters) - U.S. Treasury yields
marched higher on Tuesday as the market braced for potential
volatility on Election Day due to uncertainty over the results.
    Americans headed to the polls to decide whether incumbent
Republican President Donald Trump or his Democratic challenger
Joe Biden will be elected president.
     The benchmark 10-year yield, which earlier rose
to 0.887%, its highest level since June, was last up 3.6 basis
points at 0.884%.
     Yields on two- and five-year notes also reached multi-month
highs earlier in the session.
     Bill Merz, head of fixed income research at U.S. Bank
Wealth Management in Minneapolis, pointed to the potential for
"a significant amount of volatility" in the market as some
traders have positioned for Democrats to win the White House and
control of Congress in the election. 
    "In that scenario of a blue sweep, there is an expectation
of a larger fiscal package and that would indicate additional
supply as well as boost the prospects for reflationary pressures
to reemerge," he said.
    Still, Merz noted the 10-year yield remained rangebound and
that the U.S. Federal Reserve, which meets on Wednesday and
Thursday, could discuss shifting its Treasury purchases to the
long end of curve to prevent those yields from climbing too
high.
    He added that a medical solution to end the coronavirus
pandemic was more important than the U.S. election results due
to its impact on the nation's economic recovery. 
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last up less
than a basis point at 0.1663%.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, which is viewed as an indicator of
economic expectations, was last at 71.63 basis points, 2.6 basis
points higher from Monday's close.
November 3 Tuesday 10:01AM New York / 1601 GMT Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.095        0.0963    0.000
 Six-month bills               0.11         0.1116    0.000
 Two-year note                 99-235/256   0.1663    0.008
 Three-year note               99-192/256   0.2102    0.013
 Five-year note                99-72/256    0.3956    0.021
 Seven-year note               98-244/256   0.6535    0.028
 10-year note                  97-148/256   0.884     0.036
 20-year bond                  94-180/256   1.4335    0.042
 30-year bond                  93-72/256    1.6619    0.039
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         7.50        -0.25    
 spread                                               
 U.S. 3-year dollar swap         7.75         0.00    
 spread                                               
 U.S. 5-year dollar swap         5.50         0.00    
 spread                                               
 U.S. 10-year dollar swap        0.50        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -36.00         0.25    
 spread (By Karen Pierog in Chicago and Dhara Ranasinghe in London;
Editing by Bernadette Baum)
  
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