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TREASURIES-Yields stable ahead of Powell remarks

Ross Kerber
·2 min read

By Ross Kerber Feb 23 (Reuters) - U.S. Treasury yields were little changed on Tuesday as investors awaited comments from Federal Reserve Chairman Jerome Powell in Washington due later in the morning. The benchmark 10-year yield was up less than a basis point at 1.3704% in morning trading. Earlier in the week it had reached 1.394%, the highest since a year ago, on expectations of faster U.S. growth. Powell was due to give lawmakers an update on an economy still reeling from the pandemic but perhaps poised to take off later this year if the U.S. vaccination program hits its stride. For bond investors the question is whether the Fed will continue its dovish stance on inflation or send different signals as economic growth picks up and unemployment drops. Expectations of an uptick in prices have already boosted yields on longer-term U.S. debt significantly since the summer, and the 30-year bond's yield touched as high as 2.34% on Tuesday, the highest since early January 2020. "Short rates haven't moved but the long end of the curve has come up in anticipation of higher inflation," said Eric Jussaume, director of fixed income for Cambridge Trust. Futures tracking the Nasdaq index pointed to a more than 1% drop at the open on Tuesday as investors sold off high-flying technology stocks on valuation concerns ahead Powell's testimony. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 126 basis points, about a basis point higher than Monday's close. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down less than a basis point at 0.1129% in morning trading. February 23 Tuesday 9:03AM New York / 1403 GMT Price Current Net Yield % Change (bps) Three-month bills 0.0325 0.033 0.000 Six-month bills 0.05 0.0507 0.003 Two-year note 100-6/256 0.1129 -0.002 Three-year note 99-182/256 0.2225 -0.002 Five-year note 98-244/256 0.5906 -0.006 Seven-year note 98-92/256 0.9954 0.000 10-year note 97-184/256 1.3704 0.001 20-year bond 97-112/256 2.0318 0.013 30-year bond 92-244/256 2.1972 0.017 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 10.50 -0.25 spread U.S. 5-year dollar swap 13.00 0.00 spread U.S. 10-year dollar swap 7.50 -0.75 spread U.S. 30-year dollar swap -24.75 -1.25 spread (Reporting by Ross Kerber in Boston; Editing by Mark Heinrich)