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Bonds News

TREASURIES-Yields rise on improving risk appetite

 (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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