(Corrects to say auction is today, not Thursday)
By Kate Duguid
NEW YORK, April 21 (Reuters) - U.S. Treasury yields inched
higher on Wednesday morning in step with a small rise on Wall
Street, trading within a range that analysts expect to persist
until next week's data releases and Federal Reserve meeting.
There has been little in the way of notable data releases
scheduled this week, and Treasury yields have therefore been
trading within tight ranges. The benchmark 10-year yield
has languished since hitting a high of 1.776% on
March 30, and this week has been bound within a range of 1.552%
and 1.633%. It was last trading up 0.8 basis point at 1.570%.
The two-year yield remained anchored, which drove
the yield curve - as measured by the spread between two- and
10-year yields - up modestly to 141.5 basis
points, from 140.8 yesterday. The S&P 500 index was last
up 0.32% on the day.
"There's not much going on. The last couple of days have had
no data. We've been consolidating around these levels. The next
important data point is going to be the Fed. But again, we're
not expecting much in the way of policy hints at next week's
meeting," said Subadra Rajappa, head of U.S. rates strategy at
Societe Generale.
The Federal Open Market Committee will meet April 27-28 and
is not expected to make any meaningful adjustments to policy.
The move in the Treasury market "is going to be sideways
until we get some data or any sort of catalyst for a move
higher. I think the next catalyst is really going to come from
overseas when you start to see a pick-up in vaccination rates in
Europe," said Rajappa.
Ultimately the move in Treasury yields in the second quarter
is expected to be higher, given the positive outlook for
economic data as mass COVID-19 vaccinations allow the country to
reopen.
Later on Wednesday, the Treasury Department will sell $24
billion of 20-year bonds. While there has been improving demand
for new Treasury debt this month and last, 20-year bond auctions
have been plagued by weak demand since the maturity was
reintroduced to the market in 2020.
"I think generally speaking, it's probably going to be in
line with past auctions," said Rajappa.
She noted, however, "The focus might also be on the change
in the composition of asset purchases from the New York Fed that
might be favoring a bit more demand for the 20-year."
April 21 Wednesday 10:38 AM New York / 1438 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 0.0225 0.0228 -0.002
Six-month bills 0.0375 0.038 -0.005
Two-year note 99-242/256 0.1532 0.000
Three-year note 100-40/256 0.3223 0.002
Five-year note 99-192/256 0.8017 0.007
Seven-year note 100-10/256 1.2441 0.009
10-year note 95-244/256 1.5714 0.009
20-year bond 95-136/256 2.1531 0.006
30-year bond 91-144/256 2.2657 0.006
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 11.75 0.25
spread
U.S. 3-year dollar swap 13.25 0.75
spread
U.S. 5-year dollar swap 9.50 0.75
spread
U.S. 10-year dollar swap -0.50 0.75
spread
U.S. 30-year dollar swap -26.25 1.50
spread (Reporting by Kate Duguid)
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