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TREASURIES-U.S. yields mixed as markets consolidate amid nagging COVID concerns

Gertrude Chavez-Dreyfuss
·3 min read

By Gertrude Chavez-Dreyfuss NEW YORK, Nov 13 (Reuters) - U.S. Treasury yields were mixed on Friday in a choppy session, after trading lower for most of the week, as investors consolidated positions ahead of the weekend and remained cautious overall given the surge in coronavirus cases. The yield curve steepened on Friday, after flattening the previous session, with the spread between two-year and 10-year notes widening to 71 basis points. Total COVID-19 cases across the United States hit an all-time daily high for a third straight day on Thursday, reaching at least 160,000, and crossing the 100,000 mark for a ninth consecutive day, Reuters data showed. Total U.S. coronavirus cases hit 10.58 million, with the death toll rising to 242,979. COVID concerns have kept a lid on rates despite positive vaccine news from Pfizer. "What we have seen the last few days is some of the exuberance coming off the vaccine," said Zachary Griffiths, macro strategist at Wells Fargo. "As far as yields are concerned, the risk going forward is still to the upside as markets become comfortable with developments over the next week or two. We see a short-term range of 85 basis points to 1% on the 10-year over the next two months," he added. In mid-morning trading, U.S. benchmark 10-year yields were up at 0.891%, from 0.886% late on Thursday. Yields started to rise as U.S. stocks traded higher on Friday. U.S. 30-year yields slipped to 1.644% from Thursday's 1.652%. On the front end of the curve, U.S. two-year yields were slightly down at 0.175% from 0.177% on Thursday. "Lockdowns are now more possible than they were last week because hospitalizations are increasing at a rate of 2,000 per day. That exceeded people's expectations," said Jim Vogel, senior rates strategist, at FHN Financial in Memphis. Friday's data showing slightly better than expected producer prices had little impact on the Treasury debt market. U.S. producer prices increased a bit more than expected in October to 0.3%, but were unlikely to translate into higher inflation given considerable slack in the labor market and the resurgence in coronavirus cases. November 13 Friday 8:46AM New York / 1346 GMT Price Current Net Yield % Change (bps) Three-month bills 0.09 0.0913 0.000 Six-month bills 0.1 0.1014 0.000 Two-year note 99-230/256 0.1771 0.000 Three-year note 100-16/256 0.2291 -0.003 Five-year note 99-74/256 0.395 -0.001 Seven-year note 99-16/256 0.638 -0.002 10-year note 99-244/256 0.8799 -0.006 20-year bond 95-40/256 1.4068 -0.013 30-year bond 99-196/256 1.6349 -0.017 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.25 0.00 spread U.S. 3-year dollar swap 7.50 0.25 spread U.S. 5-year dollar swap 6.00 0.25 spread U.S. 10-year dollar swap -0.25 0.50 spread U.S. 30-year dollar swap -33.75 1.00 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Kirsten Donovan)