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TREASURIES-Yields rise on positive COVID-19 vaccine news

Karen Brettell
·3 min read

(Adds upcoming Powell appearance; updates prices) By Karen Brettell NEW YORK, Nov 16 (Reuters) - U.S. Treasury yields rose on Monday and the yield curve steepened as news of another promising coronavirus vaccine boosted optimism that the economy may be closer to returning to normal, but that was tempered by a likely slow rollout. Moderna Inc's experimental vaccine was 94.5% effective in preventing COVID-19 based on interim data from a late-stage trial, the company said on Monday, becoming the second U.S. drugmaker in as many weeks to report results that far exceeded expectations. "It's great vaccine news but it's still not being distributed to the general public," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. "Ultimately, I do think yields will go higher long-term, but there's still a massive recovery that needs to take place and we're not anywhere close to out of this." Benchmark 10-year yields rose 1.5 basis points to 0.908%. The yields reached an eight-month high of 0.975% last Monday, ahead of new supply of three-year, 10-year and 30-year debt as part of the Treasury's quarterly refunding. The yield curve between two-year and 10-year notes steepened one basis point to 73 basis points. The Federal Reserve is expected to shift more of its bond purchases to longer-dated debt if it views yields as rising too far relative to U.S. economic strength. Fed Chair Jerome Powell will speak on Tuesday at a Bay Area Council Business Hall of Fame awards event. Data on Monday showed that manufacturing growth in New York slowed in November, missing economists' expectations. The next major U.S. economic focus is October retail sales data due out on Tuesday. The Treasury Department will sell $27 billion in 20-year bonds on Wednesday and $12 billion in 10-year Treasury Inflation-Protected Securities (TIPS) on Thursday. November 16 Monday 3:00PM New York / 2000 GMT Price US T BONDS DEC0 171-28/32 -0-10/32 10YR TNotes DEC0 138-8/256 -0-20/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.0825 0.0837 -0.007 Six-month bills 0.095 0.0964 0.000 Two-year note 99-229/256 0.1791 0.000 Three-year note 100-12/256 0.2343 0.000 Five-year note 99-58/256 0.4079 0.005 Seven-year note 98-236/256 0.6589 0.009 10-year note 99-176/256 0.9078 0.015 20-year bond 94-196/256 1.4302 0.012 30-year bond 99-40/256 1.6608 0.013 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 7.75 0.50 spread U.S. 5-year dollar swap 6.25 0.50 spread U.S. 10-year dollar swap -0.25 0.50 spread U.S. 30-year dollar swap -32.75 1.00 spread (Reporting by Karen Brettell; editing by Jonathan Oatis and Richard Chang)