March 25, 2020 / 3:46 PM / 8 days ago

TREASURIES-Yields flat as Fed's bond buying pledge sinks in

NEW YORK, March 25 (Reuters) - U.S. Treasury yields were roughly flat on Wednesday morning as the scope of the Federal Reserve’s effort to stabilize markets by purchasing assets registered with investors and demand for safe-haven assets cooled.

The Fed announced on Monday it would buy bonds in unlimited numbers and backstop direct loans to companies, the latest in a series of policy steps taken over the past two weeks to calm markets and support the economy.

Yields had risen on Tuesday after falling for three consecutive sessions, and were trading slightly lower on Wednesday, but roughly in the range of the previous session.

The benchmark 10-year yield was 1.8 basis points lower to 0.800%, the 30-year yield was 2.6 basis points lower to 1.343% and the two-year yield was 3.2 basis points lower to 0.344%.

“The market is finally coming around to digesting the fact that the QE program will actually be unlimited. You’re starting to see a little bit of a reversal in the selloff we saw last week given the fact that there was concern about the increase in deficits and the potential for overwhelming long-end supply,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale.

“I think those fears are going away now that the Fed is going to be buying an unlimited amount of Treasuries, potentially.”

The market was also awaiting the outcome of a vote later on Wednesday about the passage of a fiscal stimulus bill in Congress. U.S. senators will vote on Wednesday on a $2 trillion bipartisan package of legislation to alleviate the devastating economic impact of the coronavirus pandemic, hoping it will become law quickly. (Reporting by Kate Duguid Editing by Alistair Bell)

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