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TREASURIES-U.S. yields slide after Trump halts stimulus talks

Gertrude Chavez-Dreyfuss
·3 mins read

* Trump halts coronavirus-related stimulus talks * U.S. yields fall across the board * U.S. yield curve flattens after Trump comments (Adds analyst comment, yield curve action, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Oct 6 (Reuters) - U.S. Treasury yields dropped from four-month peaks after President Donald Trump on Tuesday called off negotiations with Democratic lawmakers on a coronavirus relief stimulus package until after the Nov. 3 election. U.S. yields fell across the board, while the yield curve flattened after the news. In an about-face from his administration's stance of committing to a stimulus package before the election, Trump said relief talks will resume after the election, and he accused House of Representatives Speaker Nancy Pelosi of not negotiating in good faith. "Stocks fell and the Treasuries rallied because they had been doing the opposite, based on the idea for the last week or so that there would indeed be a stimulus package and relatively soon," said Lou Brien, market strategist, at DRW Trading in Chicago. "So this pulls the rug out from both of those moves, and I think what we're seeing is at least the fast money reacting to those statements." In afternoon trading, U.S. 10-year yields dropped to 0.746%, from 0.762% late on Monday, after earlier rising to 0.792%, the highest level since June. Yields on U.S. 30-year bonds were at 1.551%, down from 1.567% on Monday. Earlier, 30-year yields climbed to a four-month peak of 1.61%. The U.S. yield curve flattened after Trump's bombshell, with the spread of two-year and 10-year yields narrowing to 60 basis points, after hitting its widest since June. The gap between the five-year and 30-year contracted to 123 basis points, after touching 127 basis points, the largest gap since early June, as well. October 6 Tuesday 3:26PM New York / 1926 GMT Price Current Net Yield % Change (bps) Three-month bills 0.0975 0.0989 0.000 Six-month bills 0.11 0.1116 -0.002 Two-year note 99-245/256 0.1467 0.002 Three-year note 99-212/256 0.1837 -0.002 Five-year note 99-174/256 0.3149 -0.009 Seven-year note 98-254/256 0.5222 -0.015 10-year note 98-216/256 0.7469 -0.015 20-year bond 96-172/256 1.316 -0.016 30-year bond 95-212/256 1.5501 -0.017 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.25 0.25 spread U.S. 3-year dollar swap 7.50 0.25 spread U.S. 5-year dollar swap 6.75 0.25 spread U.S. 10-year dollar swap 2.25 0.75 spread U.S. 30-year dollar swap -36.75 0.75 spread (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Karen Brettell; Editing by Nick Zieminski and Will Dunham)