February 26, 2020 / 2:50 PM / a month ago

TREASURIES-Yields rise as traders position against economic risks from coronavirus

    By Ross Kerber
    BOSTON, Feb 26 (Reuters) - U.S. Treasury yields were higher
on Wednesday as traders adjusted portfolios against risks that
the spreading coronavirus epidemic would have a major economic
impact.
    The benchmark 10-year yield was up 3.7     
basis points in morning trading at 1.3671%, a day after it
reached a new record low of 1.3072%. 
    A dominant theme was the extent to which the epidemic would
disrupt global supply chains and services, and provoke official
responses from governments and central banks. 
    Jim Barnes, director of fixed income at Bryn Mawr Trust,
said Wednesday morning's trading hardly showed investors ready
to move out of Treasuries, seen as a safer investment compared
to equities and other asset classes.
    For investors seeking safety or predictability, he said,  
"There are many assets to sell and very few assets to buy, so
they're throwing out stuff on the equities side that is easy to
sell, and turning to safety."
    Even though Treasury yields were up from their lows, Barnes
said, "I wouldn't say these yields are attractive, it's more a
place to park cash."
    German government bond yields rose on Wednesday after
reports that Germany's finance minister plans to temporarily
suspend the country's debt brake, and euro zone money markets
started to price in a December ECB rate cut expected as a
stimulus measures.
    Wall Street investors were cautious as the U.S. Centers for
Disease Control and Prevention urged Americans to prepare for
the virus to spread in the United States.
    Although the outbreak in China had peaked, the World Health
Organization cautioned that its rapid spread worldwide was
inevitable. As of Wednesday, the death toll in Italy had crossed
19 and new cases in South Korea rose above 1,260.
    Investors will also be tracking the results of a U.S.
Treasury auction of $41 billion of five-year notes on Wednesday.
    The two-year  U.S. Treasury yield, which
typically moves in step with interest rate expectations, was up
less than a basis point at 1.1965% in morning trading.

      February 26 Wednesday 9:27AM New York / 1427 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.5025       1.5334    0.002
 Six-month bills               1.4225       1.4567    0.003
 Two-year note                 99-220/256   1.1965    0.005
 Three-year note               100-148/256  1.1761    0.021
 Five-year note                100-232/256  1.185     0.028
 Seven-year note               101-108/256  1.2847    0.034
 10-year note                  101-60/256   1.3671    0.037
 30-year bond                  103-112/256  1.85      0.047
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         4.00         2.25    
 spread                                               
 U.S. 3-year dollar swap         1.00         0.00    
 spread                                               
 U.S. 5-year dollar swap         0.25         0.50    
 spread                                               
 U.S. 10-year dollar swap       -6.00         0.50    
 spread                                               
 U.S. 30-year dollar swap      -38.00         0.50    
 spread                                               
 

 (Reporting by Ross Kerber; Editing by Bernadette Baum)
  
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