February 26, 2020 / 9:46 PM / a month ago

TREASURIES-Yields steady amid coronavirus concerns, after 10-year touches record low

 (Updates market activity, adds analyst comment)
    By Ross Kerber
    BOSTON, Feb 26 (Reuters) - U.S. bonds steadied on Wednesday
after a volatile trading session that saw the benchmark 10-year
Treasury yield hit a record low for a second consecutive day, as
investors focused on the economic risks of the spreading
coronavirus epidemic.
    The 10-year yield was up less than a basis point
at 1.3354% in late afternoon trading, after reaching as high as
1.3821% earlier and touching an all-time low of 1.3005%.
    Two of the three major U.S. stock indexes closed lower on
concerns about the virus' possible spread in the United States
and the rest of the world.
    Officials in Nassau County, the Long Island suburbs of New
York City, said they were monitoring 83 people who had visited
China and may have come in contact with the coronavirus.
Governor Andrew Cuomo said the state has had no confirmed cases
so far.
    "There's a lot of concern out there," said Cantor Fitzgerald
Treasury analyst Justin Lederer. "When there is uncertainty in
the world and concerns about growth, money goes right to safe
havens and Treasuries are a clear benefactor of this," he said.
    Even the higher yields were not a main reason for buying,
said Jim Barnes, director of fixed income at Bryn Mawr Trust.  
"I wouldn't say these yields are attractive; it's more a place
to park cash," he said.
    U.S. President Donald Trump was to hold a news conference on
the coronavirus outbreak at 6:30 p.m. EST (2330 GMT) Wednesday,
the White House said. 
    U.S. health authorities, managing 59 cases so far - mostly
Americans repatriated from a cruise ship in Japan - have said a
global pandemic is likely.
    New Commerce Department data on Wednesday showed sales of
new U.S. single-family homes raced to a 12-1/2-year high in
January, indicating housing market strength that could help
blunt any hit to the economy from the coronavirus and keep the
longest economic expansion in history on track.
    On Wednesday the U.S. Treasury Department said it accepted
$41 billion in bids for five-year notes out of $100.7 billion
worth of public bids tendered, at a high yield of 1.15%.
    Primary dealers accounted for 28.7% of competitive bids
accepted, somewhat higher than the 23.4% average, according to a
research note from BMO Capital Markets.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down 2.8
basis points at 1.1627% in afternoon trading.
     
      February 26 Wednesday 4:21PM New York / 2121 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.485        1.5154    -0.016
 Six-month bills               1.3975       1.4309    -0.023
 Two-year note                 99-237/256   1.1627    -0.028
 Three-year note               100-170/256  1.1467    -0.008
 Five-year note                101-14/256   1.1541    -0.003
 Seven-year note               101-160/256  1.2543    0.003
 10-year note                  101-136/256  1.3354    0.005
 30-year bond                  104-16/256   1.8234    0.020
                                                      
   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         1.25         0.25    
 spread                                               
 U.S. 5-year dollar swap         0.50         0.75    
 spread                                               
 U.S. 10-year dollar swap       -5.50         1.00    
 spread                                               
 U.S. 30-year dollar swap      -38.00         0.50    
 spread                                               
 
 (Reporting by Ross Kerber; Editing by Richard Chang and Leslie
Adler)
  
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