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Bonds News

TREASURIES-Yields rise on reports of coronavirus treatment, job gains

 (Updates with market activity, analyst comment)
    By Ross Kerber
    BOSTON, Feb 5 (Reuters) - U.S Treasury yields rose on
Wednesday as traders reacted to  positive reports on efforts to
counter the coronavirus and a strong private-sector jobs report.
    The benchmark 10-year yield was up 4.5 basis
points in afternoon trading at 1.6456%.
    Other markets also responded to early reports that a Chinese
university team found a drug to treat virus victims and to UK
researchers saying they made a "significant breakthrough" in
finding a vaccine.
    The World Health Organization played down reports of
breakthrough drugs, and set a conference in Geneva next week to
plan research and development priorities to combat the outbreak.
    "There are no proven effective therapeutics for novel
coronavirus," Dr. Mike Ryan, executive director of WHO
emergencies program, told a news conference.
    Market analysts said traders nonetheless seem to expect
authorities would successfully limit the epidemic.
    "Risks around the virus remain, but it looks like China is
doing a lot to contain the virus and that is what is leading to
the optimism in risky assets," said Subadra Rajappa, head of
U.S. rates strategy for Societe Generale. 
    She and others cautioned that traders' risk appetite could
be coming too soon, before more is known about the epidemic's
economic impact.
    "There might be some bad news that could play out here,"
said Tom di Galoma, managing director of Seaport Global
Holdings.
    China said another 65 people had died as of Tuesday, the
highest daily total yet, taking the overall toll on the mainland
to 490, most in and around the locked-down central city of
Wuhan, where the new virus emerged late last year. 
    There have been two deaths outside mainland China - in the
Philippines and Hong Kong - both following visits to
Wuhan.
    Separately U.S. private-sector payrolls rose by 291,000 jobs
in January, ADP reported on Wednesday, nearly double a forecast
and the highest increase since May 2015.
    In addition data from the Institute for Supply Management 
showed U.S. services sector activity picked up in January
following an upbeat manufacturing report this week.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was up 2.6 basis
points at 1.4411% in afternoon trading.
    
  February 5 Wednesday 2:07PM New York / 1907 GMT Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.53         1.5615    -0.013
 Six-month bills               1.53         1.5676    0.003
 Two-year note                 99-223/256   1.4411    0.026
 Three-year note               100-48/256   1.4345    0.033
 Five-year note                99-154/256   1.4582    0.036
 Seven-year note               99-148/256   1.564     0.040
 10-year note                  100-240/256  1.6456    0.045
 30-year bond                  105-84/256   2.1323    0.052
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         6.00        -0.25    
 spread                                               
 U.S. 3-year dollar swap         2.25        -0.25    
 spread                                               
 U.S. 5-year dollar swap         0.50         0.25    
 spread                                               
 U.S. 10-year dollar swap       -4.50         0.25    
 spread                                               
 U.S. 30-year dollar swap      -32.50         0.25    
 spread                                               
 
    

 (Reporting by Ross Kerber; editing by Jonathan Oatis and Nick
Zieminski)
  
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