June 15, 2020 / 2:05 PM / 21 days ago

TREASURIES-Yields fall as concerns over coronavirus spread dent risk appetite

    By Karen Brettell
    NEW YORK, June 15 (Reuters) - U.S. Treasury yields fell on
Monday as renewed concerns over the spread of the coronavirus
dented risk appetite, boosting demand for safe-haven bonds and
sending stocks lower.
    Several districts of the Chinese capital put up security
checkpoints, closed schools and ordered people to be tested for
the coronavirus on Monday after an unexpected spike of cases
linked to the biggest wholesale food market in Asia.

    New coronavirus cases and hospitalizations in record numbers
also swept through more U.S. states, including Florida and
Texas, as most push ahead with reopening.
    “We are getting renewed fears of the coronavirus,” said John
Roberts, an interest rate strategist at NatWest Markets.
    Benchmark 10-year note yields fell three basis
points to 0.672%. They have fallen from an 11-week high of
0.959% on June 5, when data showed that employers unexpected
added jobs in May, boosting hopes that the U.S. economy will see
a quick recovery.
    The yield curve between two-year and 10-year
notes was little changed on the day at 49 basis points. The
curve between 10-year notes and 30-year bonds
was at 74 basis points after reaching 83 basis points on June 5,
the steepest since March.
    NatWest sees the curve between 10-year notes and 30-year
notes as likely to steepen as the Treasury increases supply of
long-dated debt.
    The Treasury will sell $17 billion in 20-year bonds on
Wednesday. 
    The Federal Reserve last week committed to keeping the size
of its bond purchase program unchanged, but did not detail where
it would focus the purchases.
    “We thought the Fed might want to make a stronger commitment
to making it clear that they would make purchases in the
long-end of the curve, and we didn’t get that,” Roberts said.
    The Fed signaled it plans years of extraordinary support for
the economy, with policymakers projecting the economy to shrink
6.5% in 2020 and the unemployment rate to be 9.3% at year's end.

    Fed Chair Jerome Powell is expected to repeat this message
when he testifies before Congress on Tuesday and Wednesday.
    
    June 15 Monday 9:48AM New York / 1348 GMT
                               Price                  
 US T BONDS SEP0               178-1/32     0-27/32   
 10YR TNotes SEP0              138-240/256  0-52/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1675       0.1704    0.005
 Six-month bills               0.185        0.1877    0.003
 Two-year note                 99-226/256   0.185     -0.006
 Three-year note               100-28/256   0.2134    -0.008
 Five-year note                99-176/256   0.3136    -0.012
 Seven-year note               99-236/256   0.5114    -0.023
 10-year note                  99-140/256   0.6723    -0.027
 20-year bond                  98-196/256   1.1948    -0.037
 30-year bond                  96-24/256    1.4105    -0.036
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         7.00        -0.25    
 spread                                               
 U.S. 3-year dollar swap         5.00         0.25    
 spread                                               
 U.S. 5-year dollar swap         4.50         0.00    
 spread                                               
 U.S. 10-year dollar swap       -1.25         0.00    
 spread                                               
 U.S. 30-year dollar swap      -48.50         0.00    
 spread                                               
                                                      
    

 (Editing by Nick Zieminski)
  
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