Benchmark yield recovers in late trading

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BOSTON — Longer-term U.S. Treasury

yields recovered from lows in late trading on Monday as

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investors looked to some positive healthcare news and took signs

from a stock market rally.

The benchmark 10-year yield was down 1.8 basis

points at 0.7264% late on Monday after dropping as low as 0.599%

in morning trading.

Yields on shorter-term treasuries did not recover as much

however. A closely watched part of the U.S. yield curve, the

gap between the two-year and 10-year notes, stood near 49 basis

points, up six basis points from its close on Friday and in

line with its level of last week.

The re-embrace of risk by some investors on Monday came as

central banks and the United States try to contain damage from

the rapidly spreading coronavirus that has upended the global

economy.

In one sign seen as positive, the U.S. government cut deals

with Johnson & Johnson and Moderna Inc MRNA.O and said

it was in talks with at least two other companies to prepare

them to produce massive quantities of coronavirus

vaccines.

Jim Barnes, director of fixed income at Bryn Mawr Trust,

said Monday’s trading seemed to reflect that news as well as

rising stock markets, a traditional dynamic that seemed paused

during earlier points of trading.

“It does seem like there is more optimism,” he said.

U.S. stocks rose on Monday, led in part by healthcare

shares.

Still, the results of several short-term Treasury auctions

earlier in the day showed investors continue to worry about the

pandemic and whether governments are responding appropriately,

said Kim Rupert, senior economist for Action

Economics.

“There are a ton of bills and people still want more,

because next to cash it’s the most liquid thing you can

purchase,” Rupert said.

The two-year U.S. Treasury yield, which typically

moves in step with interest rate expectations, was down 3.1

basis points at 0.23% in afternoon trading.

The yield on the three-month U.S. Treasury bill was up 4.3

basis points at 0.0585%, after temporarily turning negative

overnight.

March 30 Monday 5:07PM New York / 2107 GMT

Price

US T BONDS JUN0 179-1/32 -0-1/32

10YR TNotes JUN0 138-104/256 0-36/256

Price Current Net

Yield % Change

(bps)

Three-month bills 0.0575 0.0585 0.043

Six-month bills 0.08 0.0811 0.056

Two-year note 100-74/256 0.23 -0.031

Three-year note 100-152/256 0.2981 -0.011

Five-year note 100-106/256 0.4162 -0.008

Seven-year note 100-60/256 0.5908 -0.028

10-year note 107-92/256 0.7264 -0.018

30-year bond 116-56/256 1.3395 0.004

DOLLAR SWAP SPREADS

Last (bps) Net

Change

(bps)

U.S. 2-year dollar swap 26.25 2.00

spread

U.S. 3-year dollar swap 17.25 1.25

spread

U.S. 5-year dollar swap 12.00 2.75

spread

U.S. 10-year dollar swap -0.50 6.25

spread

U.S. 30-year dollar swap -49.00 5.00

spread

(Reporting by Ross Kerber

Editing by Nick Zieminski, Sonya Hepinstall and Tom Brown)