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TREASURIES-Yields tumble on data, rising coronavirus cases

By Karen Pierog

CHICAGO, Oct 13 (Reuters)U.S. Treasury yields moved lower on Tuesday driven by soft economic data and a rise in COVID-19 cases globally that raised concerns of potential weakness ahead.

The benchmark 10-year US10YT=RR yield was last down 4.3 basis points at 0.7322%.

Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research in New York, pointed to “a lot of soft data coming out of Europe,” as well as the latest U.S. consumer price data for the downward move as the market returned from Monday’s Columbus Day holiday.

Yields extended their fall after a U.S. Labor Department report showed consumer prices rose for a fourth straight month in September but at a slower pace amid considerable slack in the economy .

Jones said more COVID-19 outbreaks in the United States and other countries were seen as constraining economic activity.

Meanwhile, the market was watching Washington for signs of a new stimulus package to combat the economic fallout from the pandemic. Jones said while nothing is expected ahead of the Nov. 3 election, a deal is likely afterwards regardless of the election outcome and that could lift yields.

“I think the path of least resistance is probably higher (yields) in Treasuries but it’s a slow move because we still don’t have signs of inflation or excessively strong growth,” she said.

The two-year US2YT=RR U.S. Treasury yield, which typically moves in step with interest rate expectations, was last down 1 basis point at 0.143%.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes US2US10=TWEB, which is viewed as an indicator of economic expectations, was last at 58.80 basis points, 3 basis points lower than at Friday’s close.

October 13 Tuesday 9:52AM New York / 1452 GMT

Price

Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.1

0.1014

0.000

Six-month bills US6MT=RR

0.115

0.1167

0.000

Two-year note US2YT=RR

99-247/256

0.143

-0.010

Three-year note US3YT=RR

99-212/256

0.1825

-0.015

Five-year note US5YT=RR

99-186/256

0.3056

-0.030

Seven-year note US7YT=RR

99-20/256

0.51

-0.039

10-year note US10YT=RR

98-252/256

0.7322

-0.043

20-year bond US20YT=RR

97-48/256

1.2861

-0.050

30-year bond US30YT=RR

96-120/256

1.5227

-0.051

DOLLAR SWAP SPREADS

Last (bps)

Net Change (bps)

U.S. 2-year dollar swap spread

8.75

0.25

U.S. 3-year dollar swap spread

7.75

0.00

U.S. 5-year dollar swap spread

7.25

-0.25

U.S. 10-year dollar swap spread

3.00

0.00

U.S. 30-year dollar swap spread

-34.25

0.50

(Reporiting by Karen Pierog; Editing by Andrea Ricci)

(([email protected]; +1 312 408 8647; Reuters Messaging: [email protected]))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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