February 12, 2020 / 8:09 PM / 8 days ago

TREASURIES-Yields higher as new coronavirus cases reportedly decline

 (Updates with market activity, Mnuchin comments)
    By Ross Kerber
    BOSTON, Feb 12 (Reuters) - U.S. Treasury yields rose on
Wednesday amid renewed risk tolerance after a reported drop in
the number of new coronavirus cases in China alleviated some
concerns about economic growth.
    The benchmark 10-year yield was up 4 basis
points in afternoon trading at 1.6299%.
    Investors sold safe-haven bonds and bid up other assets,
including U.S. stocks, also encouraged by the latest quarterly
earning reports.
    "There seems to be better risk appetite," said John Briggs,
head of strategy, Americas, at NatWest Markets. Wednesday's 
trading, he said, reflects "a removal of the flight-to-quality"
seen in recent days.
    Briggs said Treasury markets were likely not affected by
comments from U.S. Federal Reserve chairman Jerome Powell, who
on Wednesday reiterated his confidence in the sustainability of
the record-long U.S. economic expansion.
    "There’s no reason why the current situation of low
unemployment, rising wages, high job creation - there’s no
reason why it can’t go on," Powell told the Senate Banking
Committee in his second day of congressional testimony.

    China on Wednesday reported its lowest number of new
coronavirus cases since January, lending weight to a prediction
by its top medical adviser that the outbreak will end by
April.
    However, it was still unclear to what extent economic growth
would take a hit from the virus, which has killed more than
1,100 people, shuttered businesses in China and briefly
disrupted a global stock market rally in the past
weeks.            
    Also in Washington on Wednesday, U.S. Treasury Secretary
Steven Mnuchin said that the negative economic impact from the
coronavirus outbreak is a one-time event that will not last
beyond 2020.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was up 2.5 basis
points at 1.4417 % in afternoon trading.
  
        February 12 Wednesday 2:47PM New York / 1947 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.545        1.5769    -0.002
 Six-month bills               1.52         1.5573    0.007
 Two-year note                 99-223/256   1.4417    0.025
 Three-year note               99-224/256   1.4178    0.027
 Five-year note                99-170/256   1.4453    0.036
 Seven-year note               99-180/256   1.5451    0.036
 10-year note                  101-20/256   1.6299    0.040
 30-year bond                  106-80/256   2.089     0.037
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         4.00         1.00    
 spread                                               
 U.S. 3-year dollar swap         2.25         1.75    
 spread                                               
 U.S. 5-year dollar swap         0.50         1.25    
 spread                                               
 U.S. 10-year dollar swap       -5.00         1.00    
 spread                                               
 U.S. 30-year dollar swap      -32.25         1.25    
 spread                                               
 
      

 (Reporting by Ross Kerber; editing by Jonathan Oatis and Chizu
Nomiyama)
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