CHICAGO, March 11 - U.S. Treasuries rebounded on Wednesday
as stocks dropped over uncertainty on how the White House plans
to combat the impact of the coronavirus outbreak on the economy.
The 10-year note yield was last at 0.711%, down
from 0.752% at Tuesday's close.
"(Treasuries) are coming back today simply as a reaction to
the weakness in the stock market, which had such a good day
yesterday," said Lou Brien, a strategist at DRW Trading in
Chicago. "The continued uncertainty always will give a bid to
the Treasury market, and if there's anything we've got in spades
it's uncertainty right now."
Expectations of a major stimulus plan from the Trump
administration boosted Wall Street on Tuesday, following
Monday's sell-off as a plunge in oil prices compounded fears of
a global recession.
President Donald Trump and members of his economic team on
Tuesday met with Republicans in the U.S. Senate and discussed a
payroll tax cut, but no concrete measures have been announced.
Meanwhile, some investors are growing concerned about
liquidity disruptions in the Treasury market given recent large
shifts in yields.
"It's conditional. If you get a couple days where things
calm down because there's no fresh news and we don't get big
swings, then the volume kind of comes back and the bids and
offers tighten up," Brien said.
Yields on 10-year Treasury notes were little changed after
the U.S. Labor Department reported its consumer price index
unexpectedly increased 0.1% last month, matching January's gain,
as rising food and accommodation costs offset cheaper gasoline.
Thirty-year Treasury yields were at 1.211%, down
from 1.233% on Tuesday.
The Treasury will sell $24 billion of 10-year notes on
Wednesday, following a weak $38 billion auction of three-year
notes on Tuesday.
After boosting its limit on daily cash injections earlier
this week, the New York Federal Reserve on Wednesday accepted
all of the $132.38 billion in bids from primary dealers at an
overnight repurchase agreement (repo) operation.
It was the largest amount of repo loans since the liquidity
operations began in September.
March 11 Wednesday 10:18AM New York / 1418 GMT
Price Current Net Change
Yield % (bps)
Three-month bills 0.405 0.4122 -0.014
Six-month bills 0.39 0.3973 -0.022
Two-year note 101-81/256 0.4521 -0.035
Three-year note 99-224/256 0.5421 -0.014
Five-year note 102-166/256 0.5833 -0.032
Seven-year note 102-240/256 0.6924 -0.029
10-year note 107-140/256 0.7114 -0.041
30-year bond 119-192/256 1.2113 -0.022
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 1.25 -2.75
spread
U.S. 3-year dollar swap -3.25 -3.50
spread
U.S. 5-year dollar swap 3.75 -1.25
spread
U.S. 10-year dollar swap 1.75 -1.50
spread
U.S. 30-year dollar swap -46.50 -5.00
spread
(By Karen Pierog in Chicago and Karen Brettell in New York
Editing by Paul Simao)
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