(Recasts, adds bond auction results, analyst comments)
By Karen Pierog
CHICAGO, April 13 (Reuters) - U.S. Treasury yields fell
further and the yield curve flattened more on Tuesday as the
last of this week's coupon auctions was met with solid demand.
The $24 billion of 30-year bonds were sold at a high yield
of 2.320% and a bid-to-cover ratio, a gauge of demand, of an
above-average 2.47 times.
Analysts at Jefferies called the results "fabulous," as well
as "quite surprising given the lack of concession that led up to
the bidding deadline."
The offering followed Monday's relatively smooth auctions of
three- and 10-year notes totaling $96 billion.
The benchmark 10-year yield was last down 4.9
basis points at 1.6269% and the 30-year yield was
4.1 basis points lower at 2.3069%.
A closely watched part of the yield curve that measures the
gap between yields on two- and 10-year Treasury notes
was flatter following the auction. It was last 3.29
basis points lower at 146.58 basis points.
The market has been focusing on auctions after a poor
showing for a seven-year note offering in February sparked a run
up in yields.
A move higher earlier on Tuesday that lifted the 10-year
yield to 1.703% had abated after U.S. federal health agencies
recommended pausing the use of Johnson & Johnson's
COVID-19 vaccine due to concerns related to blood clots.
Yields also eased after consumer prices data showed that
while underlying inflation picked up in March, it was not wildly
rising as feared.
With the economy getting a boost from the coronavirus
vaccine rollout and massive fiscal stimulus, the consumer price
index jumped 0.6% last month, the largest gain since August
2012, after rising 0.4% in February, the U.S. Labor Department
said on Tuesday. Core CPI, excluding food and energy prices,
rose 0.3%, after edging up 0.1% in February and was up 1.6% on a
year-on-year basis.
Zachary Griffiths, macro strategist at Wells Fargo in
Charlotte, said the data showed that "inflation isn't running
away anytime soon and it's not going to cause the (U.S. Federal
Reserve) to reassess its approach to monetary policy in the near
future."
"We've had yields run up a ton on expectations that
inflation is going to be going to the moon ... but (the data)
doesn't show any signs of getting completely out of control, at
least not yet," he said.
The 10-year Treasury Inflation-Protected Securities
breakeven inflation rate rose to as high as 2.352%
in the wake of the CPI data. It was last at 2.331%.
The two-year Treasury yield, which typically
moves in step with interest rate expectations, was last less
than a basis point lower at 0.1629%.
April 13 Tuesday 1:51PM New York / 1751 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 0.02 0.0203 -0.003
Six-month bills 0.04 0.0406 0.000
Two-year note 99-237/256 0.1629 -0.008
Three-year note 100-16/256 0.354 -0.028
Five-year note 99-136/256 0.8466 -0.045
Seven-year note 99-180/256 1.2947 -0.049
10-year note 95-116/256 1.6269 -0.049
20-year bond 94-224/256 2.195 -0.046
30-year bond 90-184/256 2.3069 -0.041
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 11.50 -0.25
spread
U.S. 3-year dollar swap 11.75 -2.75
spread
U.S. 5-year dollar swap 9.50 -1.00
spread
U.S. 10-year dollar swap 0.50 -1.25
spread
U.S. 30-year dollar swap -24.00 -1.25
spread (Reporting by Karen Pierog; Editing by Steve Orlofsky)
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