0 Minutes Read (Updates prices, adds reverse repo data)
Chuck Mikolajczak contributed to this article.
Reuters, NEW YORK, July 9 – Treasury yields rose on Friday, interrupting an eight-day price boom fuelled in part by concerns that the economic recovery had already peaked and was showing signs of weakening amid a global outbreak of coronavirus infections.
Recent data on the labor market and services sector has given investors pause, raising fears that the US economy is not strengthening as quickly as expected and may be showing signs of underlying weakness, while the Delta variant of COVID-19 has raised fears that economies around the world may need to reimpose restrictions.
Based on evidence of increased risk of infection six months after inoculation and the development of the highly contagious Delta variant, Pfizer and partner BioNTech plan to seek US and European regulators in the coming weeks to approve a booster dose of their COVID-19 vaccine.
“As we move farther into the summer here, you start to hear some anxieties that we’ll be shutting down again in the fall,” said Tom di Galoma, managing director of Seaport Global Holdings in New York. “One of the major difficulties is that everything is getting pushed back from when we were expected to have this spectacular breakout from the pandemic.”
After plunging as low as 1.25 percent on Thursday, the yield on 10-year Treasury notes rose 7 basis points to 1.358 percent, the highest level since February 16.
The 10-year yield’s eight-day loss was the longest since a nine-session drop that concluded on March 3, 2020, as the COVID-19 pandemic in the United States was gathering traction. Recent volatility in the oil markets, a lack of supply with a lack of longer-term government auctions this week, and a market that was predominantly short, analysts said, all contributed to the decline in rates.
Analysts believe that next week’s U.S. Treasury auctions, which include $38 billion in 10-year notes on Monday and $24 billion in 30-year bonds on Tuesday, would help to reduce supply and raise rates.
Low vaccination rates in some parts of the world are a threat to the United States and global prosperity, according to Mary Daly of the Federal Reserve, who also stated that the US central bank was totally dedicated to addressing job shortages.
The amount of money coming into the Federal Reserve’s overnight reverse repurchase operation fell to $780.6 billion on Friday, down from $793.4 billion the day before and significantly below the record high of $992 billion set last Wednesday.
The spread between rates on two- and 10-year Treasury notes, which is viewed as a sign of economic prospects, was at 114.1 basis points after flattening to 104.2 the day before, the narrowest since February 12. On the week, it has flattened out by roughly 5 basis points.
Despite Friday’s increase, the benchmark 10-year yield is still down more than 7 basis points on the week and on track for its largest two-week drop in nearly 13 months.
The 30-year Treasury bond yield rose 7.5 basis points to 1.985 percent on Friday, after falling to 1.856 percent on Thursday, its lowest level since February 2.
Friday, July 9th, 2:25 p.m. in New York / 1825 p.m. in GMT
Price
US T BONDS SEP1 162-18/32 -1-12/32 10YR US T BONDS SEP1 162-18/32 -1-12/32 10YR US T BONDS SEP TNotes SEP1 133-108/256 -0-120/2 56 Price TNotes SEP1 133-108/256 -0-120/2 56 Price Percentage Change in Current Net Yield (bps)
0.0525 0.0532 0.000 0.0525 0.0532 0.000 0.0525 0.0532 0.000 0.0525 0.0532
0.0525 0.0532 0.002 0.0525 0.0532 0.002 0.0525 0.0532 0.002 0.0525 0.0532
99-211/256 0.2146 0.023 99-211/256 0.2146 0.023 99-211/256 0.2146 0.023 99-211/256
99-150/256 0.3925 0.036 99-150/256 0.3925 0.036 99-150/256 0.3925 0.036 99-150/
100-112/256 0.785 0.048 0.785 0.048 0.785 0.048 0.785 0.048 0.785 0.048
Note with a seven-year maturity of 100-236/256 0.058 1.1121 1.1121 1.1121 1.1121 1.1121
102-116/256 1.3578 0.070 102-116/256 1.3578 0.070 102-116/256 1.3578 0.070 102-1
108-192/256 1.985 0.075 0.075 0.075 0.075 0.075 0.075 0.075 0.075 0.075
SWAP DOLLAR SPREADS
Finally (bps) Change in the net (bps)
8.25 0.25 spread on a two-year dollar swap in the United States
12.25 0.25 spread on a three-year dollar swap in the United States
8.50 0.50 spread on a 5-year dollar swap in the United States
-0.50 0.75 spread on a 10-year dollar exchange in the United States
-27.75 1.50 spread on a 30-year dollar swap in the United States
(Chuck Mikolajczak contributed reporting; Kirsten Donovan and Leslie Adler edited the piece.)/n
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