(Recasts based on auction results, updates with market
activity, gold prices, TIPS, graphics)
By Ross Kerber
July 27 (Reuters) - U.S. Treasury yields rose back after
declines on Monday as investors showed continued demand for
notes at auction and prepared for a dovish message from the U.S.
Federal Reserve later this week.
The benchmark 10-year yield was up one basis
point at 0.5987% in afternoon trading after reaching as low at
0.569% earlier in the session.
Midday auction results showed the U.S. Treasury sold $48
billion of 2-year notes at a high yield of 0.155%, and sold $49
billion of 5-year notes at a high yield of 0.288%.
For each note, the auction result was the lowest on record
even as the amounts sold were the largest, said BMO Capital
Markets rates strategist Ben Jeffery. The outcomes showed solid
demand for the securities as Washington leaders try to finish a
new aid plan with jobless benefits set to expire amid the
COVID-19 pandemic.
"The fact that these auctions are still met with solid
demand, even at such a low yield, is encouraging," he said. "It
means there is still more space for issuance increases if
needed."
No major announcements are expected at the end of the U.S.
central bank's two-day meeting on Wednesday. But
analysts foresee policymakers laying the groundwork for weak
economic expectations and more dovish action later this year.
Investors bought up other safe- haven assets on Monday as
Sino-U.S. tensions rose and coronavirus cases climbed in
southern and western U.S. states. Gold prices soared
to an all-time high on Monday while the U.S. dollar
fell.
Yields on 10-year inflation-protected U.S. Treasury bonds
were at minus 0.913%, on track for a record
closing low.
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 44 basis points, roughly unchanged since
Friday's close.
July 27 Monday 1:55PM New York / 1755 GMT
Price
US T BONDS SEP0 180-31/32 -0-4/32
10YR TNotes SEP0 139-128/256 -0-20/25
6
Price Current Net
Yield % Change
(bps)
Three-month bills 0.1025 0.1039 -0.005
Six-month bills 0.13 0.1319 -0.002
Two-year note 99-241/256 0.1555 0.006
Three-year note 99-214/256 0.1805 0.010
Five-year note 99-216/256 0.282 0.008
Seven-year note 100-84/256 0.4518 0.007
10-year note 100-64/256 0.5987 0.010
20-year bond 101-208/256 1.0236 0.000
30-year bond 100-92/256 1.2355 -0.003
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 6.25 0.25
spread
U.S. 3-year dollar swap 4.75 0.00
spread
U.S. 5-year dollar swap 3.25 0.25
spread
U.S. 10-year dollar swap -0.75 0.25
spread
U.S. 30-year dollar swap -41.00 1.00
spread
(Reporting by Ross Kerber in Boston
Editing by Nick Zieminski)
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