TREASURIES-Yields fall as investors wait for effective response

2020-04-21
    By Ross Kerber
    BOSTON, April 21 (Reuters) - Safety-seeking investors pushed
down U.S. Treasury yields on Tuesday, with the five-year note
hitting a new record low, as the difficulties of restarting the
U.S. economy amid the COVID-19 pandemic sank in.
    The benchmark 10-year yield was down 8 basis
points in morning trading at 0.5456%. The yield on the five-year
note also sank and at one point was at 0.301%, its lowest ever.
    Seaport Global Holdings managing director Tom di Galoma said
the trading reflected a basket of worries, including lower oil
prices and a resulting hit to stock values stemming from
wholesale closures of American cities and states.
    "It's a continued flight to quality. Investors are looking
for a safety asset, and Treasuries happens to be that," di
Galoma said. 
    A potential spending deal in Congress could help improve
investors' mood, he said, but the bigger need is for officials
to arrange for things like reliable and widespread virus tests
so that major parts of the U.S. economy can be reopened quickly.
     U.S. Senate Democratic Leader Chuck Schumer said on Tuesday
he thinks Republicans and Democrats have agreed on a fourth
coronavirus spending bill, and that the Trump administration has
also agreed to a national testing strategy.
    But U.S. stock index futures were down on gloomy quarterly
earnings reports and oil price trends.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, seen as an indicator of economic
expectations, was at 35 basis points, about 8 basis points lower
than at Monday's close. 
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down 1.5
basis points at 0.1873% in morning trading.
    
      April 21 Tuesday 9:07AM New York / 1307 GMT
                               Price                  
 US T BONDS JUN0               182-31/32    2-7/32    
 10YR TNotes JUN0              139-168/256  0-140/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1125       0.1144    -0.013
 Six-month bills               0.1375       0.1395    -0.010
 Two-year note                 100-93/256   0.1873    -0.015
 Three-year note               100-20/256   0.2237    -0.029
 Five-year note                100-244/256  0.3054    -0.047
 Seven-year note               101-60/256   0.4442    -0.064
 10-year note                  109-28/256   0.5456    -0.080
 30-year bond                  122          1.1289    -0.106
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        21.75         0.00    
 spread                                               
 U.S. 3-year dollar swap        15.00         0.25    
 spread                                               
 U.S. 5-year dollar swap        11.75         0.25    
 spread                                               
 U.S. 10-year dollar swap        7.00         0.75    
 spread                                               
 U.S. 30-year dollar swap      -37.50         0.75    
 spread                                               
 

 (Reporting by Ross Kerber in Boston; editing by Jonathan Oatis)
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