TREASURIES-Yields dip as talks on new economic stimulus on tap

    By Karen Pierog
    CHICAGO, July 21 (Reuters) - U.S. Treasury yields fell
slightly on Tuesday in range-bound trading as the market watched
for the next round of aid out of Washington to combat the
economic fallout from the coronavirus pandemic.
    The benchmark 10-year yield was last down 1.5
basis points at 0.6053%.
    Kathy Jones, chief fixed income strategist at the Schwab
Center for Financial Research in New York, said U.S. Federal
Reserve policy "has sort of crushed volatility and kept yields
very low."
    However, a bigger-than-expected fiscal stimulus bill could
steepen the yield curve "and encourage expectations that maybe
we get a little more growth sooner rather than later and the Fed
might pivot sooner rather than later," Jones said, adding that
would be surprising but possible.
    Negotiations between congressional lawmakers and the White
House over a new round of aid were on tap for Tuesday as virus
infections and deaths surged to record levels.
    Jones said if a lot more states shut down again and 
evidence emerges that the economy is rolling back over to
recession, the 10-year yield could head lower.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last down
less than a basis point at 0.1452%.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, which is viewed as an indicator of
economic expectations, was last at 46 basis points, less than a
basis point lower than at Monday's close.
   No bids were submitted in 28-day repurchase agreement (repo)
operation, according to the New York Federal Reserve.
    July 21 Tuesday 9:12AM New York / 1412 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.125        0.1268    0.003
 Six-month bills               0.135        0.137     0.003
 Two-year note                 99-246/256   0.1452    -0.004
 Three-year note               99-220/256   0.1723    -0.006
 Five-year note                99-224/256   0.2755    -0.009
 Seven-year note               100-80/256   0.4542    -0.014
 10-year note                  100-48/256   0.6053    -0.015
 20-year bond                  100-208/256  1.0793    -0.015
 30-year bond                  98-160/256   1.3058    -0.012
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         6.75        -0.25    
 spread                                               
 U.S. 3-year dollar swap         5.00         0.00    
 spread                                               
 U.S. 5-year dollar swap         3.50         0.25    
 spread                                               
 U.S. 10-year dollar swap       -2.25         0.50    
 spread                                               
 U.S. 30-year dollar swap      -47.00         0.25    
 spread                                               
                                                      
 

 (Reporting by Karen Pierog in Chicago; editing by Jonathan
Oatis)
  

Source: Read Full Article