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TREASURIES-Benchmark U.S. yields dip for third straight day

Chuck Mikolajczak
·3 min read

By Chuck Mikolajczak NEW YORK, March 2 - Benchmark U.S. yields dipped on Tuesday for a third straight session after jumping to a one-year high last week, ahead of comments from two Federal Reserve officials as investors look for data to pick up later this week, highlighted by Friday's payrolls report. Federal Reserve Board Governor Lael Brainard speaks on the U.S. economic outlook and monetary policy before virtual Council of Foreign Relations at 1 p.m. EST (1800 GMT) while Federal Reserve Bank of San Francisco President Mary Daly speaks to a virtual event of the Economic Club of New York at 2 p.m. (1900 GMT). Fed officials in recent days have largely been in sync in their comments that they do not see inflation becoming problematic, after Chair Jerome Powell indicated last week the central bank will remain accommodative until inflation has exceeded 2%. "Back in August they made a major transitional shift in the nature of monetary policy and it wasn’t fully appreciated at the time, and people are slowly coming around to understanding this Fed is really, really focused on this concept of maximum employment because they sense the global deflationary pressures," said Steven Ricchiuto, U.S. chief economist at Mizuho Securities USA LLC in New York. "And they have opted to go the route that the best defense against global deflation is a little more domestic inflation, therefore they are going to allow it to run hot." The yield on 10-year Treasury notes was down 1.9 basis points to 1.427%. The yield is down nearly 20 basis points since jumping to 1.614% last week in the wake of a poor 7-year auction and as expectations increased that the economy was improving, sparking inflation concerns. Investors will also have a raft of economic data to digest shortly, with reports on the labor market in each of the next three days, culminating in Friday's payrolls report for February. Also expected is a report on the health of the services sector for February and January factory orders. Stronger than anticipated data could once again fuel inflation worries, which could lead to another test of the 1.50% level on the 10-year. The yield on 30-year Treasury bond was down 0.3 basis points to 2.218%. March 2 Tuesday 10:42AM New York / 1542 GMT Price US T BONDS JUN1 159-9/32 0-3/32 10YR TNotes JUN1 133-104/256 0-56/256 Price Current Net Yield % Change (bps) Three-month bills 0.04 0.0406 0.000 Six-month bills 0.06 0.0609 0.000 Two-year note 100 0.125 0.002 Three-year note 99-154/256 0.2604 -0.008 Five-year note 99-16/256 0.6914 -0.020 Seven-year note 100-48/256 1.0971 -0.026 10-year note 97-52/256 1.4273 -0.019 30-year bond 92-136/256 2.2175 -0.003 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.50 -0.50 spread U.S. 3-year dollar swap 11.75 -0.25 spread U.S. 5-year dollar swap 11.25 0.00 spread U.S. 10-year dollar swap 6.50 -0.75 spread U.S. 30-year dollar swap -27.50 -1.25 spread (Reporting by Chuck Mikolajczak Editing by Mark Heinrich)