(Adds two-year auction results, updates prices) By Karen Brettell NEW YORK, May 26 (Reuters) - U.S. Treasury yields rose on Tuesday as improving risk appetite boosted stocks and reduced demand for safe-haven U.S. bonds, and after Treasury sold a record amount of two-year notes to solid demand. U.S. stocks jumped and the S&P 500 crossed 3,000 points as optimism about a potential coronavirus vaccine and a revival in business activity helped investors overlook simmering Sino-U.S. tensions. The Treasury saw good demand for $44 billion in two-year notes, the largest two-year sale on record. The auction had a bid to cover ratio of 2.68 times. Two-year Treasury yields were last 0.178%. They have risen from a record low of 0.105% on May 8 but have held below 0.20% since that date. The Treasury will also auction $45 billion in five-year notes on Wednesday and $38 billion in seven-year notes on Thursday. “The market right now remains range bound, even with all the supply and the Fed tapering their purchases,” said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. “I think supply at some point will be a factor, but it’s not yet.” The United States government has been increasing the size of its debt auctions as it finances spending meant to blunt the economic impact of business shutdowns designed to stem the spread of the novel coronavirus. The Federal Reserve has been reducing its daily bond purchases, after ramping them up to record levels in March to help stabilize the market as investors struggled to make trades due to worsening liquidity. Benchmark 10-year note yields rose four basis points to 0.697%. The yields have traded in a range from 0.543% to 0.785% since the beginning of April. May 26 Tuesday 3:00PM New York / 1900 GMT Price US T BONDS JUN0 178-31/32 -1-9/32 10YR TNotes JUN0 138-244/256 -0-52/25 6 Price Current Net Change Yield % (bps) Three-month bills 0.1275 0.1297 0.008 Six-month bills 0.15 0.1522 0.000 Two-year note 99-230/256 0.1778 0.010 Three-year note 99-182/256 0.2228 0.016 Five-year note 100-32/256 0.3494 0.016 Seven-year note 99-200/256 0.5322 0.025 10-year note 99-80/256 0.6965 0.038 30-year bond 95-108/256 1.4386 0.067 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.75 0.00 spread U.S. 3-year dollar swap 5.50 -0.75 spread U.S. 5-year dollar swap 3.00 -0.50 spread U.S. 10-year dollar swap -1.25 -1.00 spread U.S. 30-year dollar swap -45.75 -1.00 spread (Editing by Nick Zieminski)
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