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TREASURIES-U.S. Treasury yields head higher with talk of economic stimulus

Karen Pierog

CHICAGO, March 10 - U.S. Treasury yields on Tuesday rose from all-time lows as global oil and stock markets rebounded after huge losses on Monday fueled by an oil price war and growing concerns over the economic impact of the coronavirus. The 10-year bond yield was last at 0.629%, well above its new record low of 0.318% "You do have some further talk of fiscal stimulus in the United States and Europe and Japan that's giving some confidence," said Stan Shipley, fixed income strategist at Evercore ISI in New York. Wall Street opened stronger on stimulus hopes, recovering some of the losses it suffered from Monday's biggest one-day percentage fall. Sentiment was bolstered overnight after President Donald Trump promised "major" steps to combat the virus outbreak and said he would discuss a payroll tax cut with congressional Republicans. Oil also regained some losses from its biggest one-day decline since the Gulf War in 1991, supported by expectations for a settlement to the price war between Saudi Arabia and Russia and potential U.S. output cuts. Thirty-year Treasury yields, which fell to a record low of 0.70% on Monday, last traded at 1.103%. After tumbling to a 5-1/2-year low of 0.251% on Monday, two-year Treasury yields were trading at 0.416%. As for overnight repurchase agreement (repo) operations, the New York Federal Reserve accepted all $123.63 billion in bids from primary dealers after raising its limit to $150 billion from $100 billion on Monday to ensure an ample supply of bank reserves. However, 14-day repos were oversubscribed with the NY Fed accepting $45 billion out of $93 billion in bids. The oversubscribed operation indicates demand for loans remains high as investors worry about the economic impact of the coronavirus outbreak and repercussions from plunging oil prices.

March 10 Tuesday 8:09AM New York / 1309 GMT Price

Price Current NetYield % Change

(bps)

Three-month bills 0.42 0.4275 0.039Six-month bills 0.4225 0.4305 0.060Two-year note 101-100/256 0.4155 0.068Three-year note 102-158/256 0.4748 0.100Five-year note 102-230/256 0.5333 0.107Seven-year note 103-72/256 0.6428 0.13210-year note 108-96/256 0.6288 0.13130-year bond 122-208/256 1.103 0.165

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 8.00 -4.25

spread

U.S. 3-year dollar swap 4.75 -6.50

spread

U.S. 5-year dollar swap 6.00 -4.25

spread

U.S. 10-year dollar swap 5.00 -4.25

spread

U.S. 30-year dollar swap -40.00 -8.50

spread

(By Karen Pierog in Chicago and Karen Brettell in New York; Editing by David Gregorio)