May 14, 2020 / 6:33 PM / 21 days ago

TREASURIES-Yields down as investors gauge reopening progress

 (Updates with market activity, analyst comment)
    By Ross Kerber
    BOSTON, May 14 (Reuters) - Investors pushed U.S. Treasury
yields lower on Thursday as they took stock of another grim jobs
report and tried to gauge the success of efforts to reopen the
economy in the face of the COVID-19 pandemic.
    The benchmark 10-year yield was down 3.1 basis
points in afternoon trading at 0.6202%.
    That was close to its level at 8:30 a.m. when the Labor
Department said initial claims for state unemployment benefits
totaled a seasonally adjusted 2.981 million for the week ended
May 9, the latest in a series of massive job loss reports.

    The muted reaction showed traders more focused on whether
public officials and business leaders can reopen parts of the
U.S. economy without causing a wave of new cases that overwhelms
hospitals and sends people back into lockdown mode, said Ian
Langen, head of U.S. rates strategy for BMO Capital Markets.
    "The market is priced in for a second spike in cases, but
not for a second prolonged shutdown," Langen said. 
    While the 10-year yield was above 70 basis points at the
start of the week, the current trading reflects a steady supply
of notes at auctions and continued demand notably from non-U.S.
buyers, said Raymond James market strategist Ellis Pfifer.

    Those buyers also will want to see progress on both the
economic and public health fronts.
    "The bond market is saying, 'wait and see'," Phifer said.
    Wall Street's main indexes were also lower on Thursday on 
renewed Sino-U.S. trade tensions and economic
concerns. 
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, seen as an indicator of economic
expectations, was at 47 basis points, about 2 basis points lower
than Wednesday's close.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down less
than a basis point at 0.153%.
    
      May 14 Thursday 2:11PM New York / 1811 GMT
                               Price                  
 US T BONDS JUN0               181-19/32    0-30/32   
 10YR TNotes JUN0              139-100/256  0-44/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1175       0.1195    -0.003
 Six-month bills               0.1475       0.1497    -0.005
 Two-year note                 99-242/256   0.153     -0.008
 Three-year note               99-206/256   0.1903    -0.013
 Five-year note                100-92/256   0.3019    -0.016
 Seven-year note               100-36/256   0.4794    -0.019
 10-year note                  100-12/256   0.6202    -0.031
 30-year bond                  98-220/256   1.296     -0.057
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         9.75        -0.50    
 spread                                               
 U.S. 3-year dollar swap         5.75         0.25    
 spread                                               
 U.S. 5-year dollar swap         2.50         0.25    
 spread                                               
 U.S. 10-year dollar swap       -3.25         1.00    
 spread                                               
 U.S. 30-year dollar swap      -48.25         1.00    
 spread                                               
 
    

 (Reporting by Ross Kerber in Boston; Editing by Nick Zieminski
and Daniel Wallis)
  
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