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TREASURIES-U.S. Treasury yields head higher with talk of economic stimulus

By Karen Pierog

(Adds three-year note auction results, analyst comments) By Karen Pierog CHICAGO, March 10 - U.S. Treasury yields on Tuesday rose from all-time lows as global oil and stock markets rebounded after huge losses on Monday fueled by an oil price war and growing concerns over the economic impact of the coronavirus. The 10-year note yield was last at 0.775%, well above its new record low of 0.318%. "You do have some further talk of fiscal stimulus in the United States and Europe and Japan that's giving some confidence," said Stan Shipley, fixed income strategist at Evercore ISI in New York. U.S. stock indices were higher on stimulus hopes, recovering some of the losses they suffered during Monday's biggest one-day percentage fall. President Donald Trump and Republican lawmakers discussed stimulus plans to bolster the economy on Tuesday afternoon. At an earlier White House meeting with healthcare executives, Trump said his administration intended to help airlines and the cruise line industry. Oil also regained some losses from its biggest one-day decline since the Gulf War in 1991, as the possibility of economic stimulus encouraged buying and Russia signaled that it may yet hold talks with OPEC about cooperation on output cuts. Thirty-year Treasury yields, which fell to a record low of 0.702% on Monday, last traded at 1.272%. After tumbling to a 5-1/2-year low of 0.251% on Monday, two-year Treasury yields were trading at 0.483%. The Treasury Department saw soft demand for a $38 billon sale of three-year notes, with especially weak interest from direct bidders. These include large central banks such as China's and Japan’s, and some fund managers. Direct bidders took only 3.71% of the sale, while indirect bidders took 52.26% and dealers bought 44.03% of the notes. The Treasury will also sell $24 billion of 10-year notes on Wednesday and $16 billion of 30-year bonds on Thursday. "If there is kind of tepid demand, maybe that leads to yields moving a little higher," said Collin Martin, a fixed income strategist at Schwab Center for Financial Research in New York. "Given that our yields, at their very, very low level, are still positive and above those of places like Japan and Germany, that's likely to keep demand pretty strong," Martin added. March 10 Tuesday 2:06PM New York / 1906 GMT Price Current Net Yield % Change (bps) Three-month bills 0.42 0.4275 0.039 Six-month bills 0.41 0.4177 0.047 Two-year note 101-66/256 0.4827 0.136 Three-year note 102-84/256 0.5729 0.198 Five-year note 102-100/256 0.6356 0.210 Seven-year note 102-144/256 0.747 0.236 10-year note 106-236/256 0.7745 0.277 30-year bond 118-20/256 1.2719 0.334 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 6.25 -6.00 spread U.S. 3-year dollar swap 2.00 -9.25 spread U.S. 5-year dollar swap 5.00 -5.25 spread U.S. 10-year dollar swap 3.25 -6.00 spread U.S. 30-year dollar swap -41.50 -10.00 spread (By Karen Pierog in Chicago and Karen Brettell in New York; Editing by David Gregorio and Will Dunham)