March 19, 2020 / 2:06 PM / 15 days ago

TREASURIES-Yields down in choppy session as investors puzzle out policy

    By Ross Kerber
    BOSTON, March 19 (Reuters) - U.S. Treasury yields largely
fell in volatile trading on Thursday as investors took stock of
a string of new policy responses to the coronavirus pandemic and
a report showed new jobless claims soaring.
    The yield on the benchmark 10-year U.S. Treasury note
 was at 1.1354%, down 12.3 basis points for the
    But the yield on the 3-month U.S. Treasury bill
was up 2.1 basis points to 0.0407%. Analysts said the low level
indicated investors were piling into the short-term security as
a safety play while taking stock of various new initiatives by
President Donald Trump's administration, the Fed and health
authorities to deal with the crisis.
    "There's tremendous duration risk at the back end of the
curve," said Michael Lorizio, senior fixed income trader for
Manulife Investment Management. "You're seeing rotation trades
out of stocks, and on anything going into fixed income the flows
seem overwhelmingly geared toward the front end of the curve."
    Many investors were still trying to understand the
implications of steps by policymakers including slashed 
interest rates and other steps to improve liquidity.
    "Everyone is trying to digest what impact all this stimulus
will have on Treasuries," Lorizio said. 
    Major U.S. stock exchanges opened lower. 
    A report Thursday morning by the Labor Department showed the
number of Americans filing for unemployment benefits surged to a
2-1/2-year high last week as companies in the services sector
laid off workers because of the coronavirus pandemic that has
fractured economic activity. 
    U.S. Treasury Secretary Steven Mnuchin urged Congress to
move quickly to pass a $1 trillion economic relief measure by
early next week, saying he expects bipartisan support for the
bill to get cash payments to Americans during the
    In addition the U.S. Federal Reserve opened the taps for
central banks in nine new countries to access dollars. 
    The Fed said the swaps, in which the Fed accepts other
currencies as collateral in exchange for dollars, will for at
least the next six months allow other central banks to tap up to
a combined total of $450 billion to back up the world's
dollar-dependent financial system.
      March 19 Thursday 9:49AM New York / 1349 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.04         0.0407    0.021
 Six-month bills               0.0525       0.0532    -0.023
 Two-year note                 101-56/256   0.4947    -0.035
 Three-year note               99-184/256   0.5951    -0.064
 Five-year note                102-12/256   0.7031    -0.112
 Seven-year note               100-180/256  1.0199    -0.114
 10-year note                  103-104/256  1.1354    -0.123
 30-year bond                  104-144/256  1.802     -0.092
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         9.00         3.00    
 U.S. 3-year dollar swap         0.75         2.00    
 U.S. 5-year dollar swap         2.00         0.25    
 U.S. 10-year dollar swap      -15.50        -1.75    
 U.S. 30-year dollar swap      -79.00        -4.50    
 (Reporting by Ross Kerber; Editing by Will Dunham)
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