(Updates with market activity, auction results, analyst
comment, Bank of Canada announcement)
By Kate Duguid and Ross Kerber
NEW YORK / BOSTON, April 21 (Reuters) - U.S. Treasury yields
remained range-bound on Wednesday even after an auction of
20-year bonds showed strong demand, a pattern analysts expect to
persist until next week's data releases and Federal Reserve
meeting.
Absent much economic news, 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 at 1.5643%, nearly unchanged for the
session.
In a $24 billion U.S. Treasury auction of 20-year bonds
in the early afternoon, direct bidders took 20.2% of
the offer.
That was five percentage points more than average and the
first time in the 12-month auction history of the bonds that
direct bidders accounted for more than 20% of accepted bids,
according to a note from DRW Trading market strategist Lou
Brien, who called the demand "strong."
Eric Jussaume, director of fixed income for Cambridge Trust,
said the result suggested the bonds retain their appeal for
non-U.S. buyers like those facing negative interest rates at
home, even as the U.S. Federal Reserve signals no plan for rate
hikes soon.
"There's still a lot of demand for long-end paper,
especially from foreign buyers," Jussaume said.
However, after the auction the yield on the bond was almost
unchanged for the day like other U.S. debt, last at 2.1442%.
Separately, the Bank of Canada signaled on Wednesday that it
could start hiking interest rates in late 2022, as it sharply
boosted its outlook for the Canadian economy and reduced the
scope of its bond buying program.
Wall Street's main indexes rose on Wednesday after falling
for two straight sessions, as gains in mega-cap stocks more than
offset a decline in Netflix following disappointing
results.
The two-year yield remained anchored, which also
left the yield curve - as measured by the spread between two-
and 10-year yields - at 141 basis points, roughly
the same as Tuesday's close.
"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.
April 21 Wednesday 1:35PM New York / 1735 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 99-243/256 0.1512 -0.002
Three-year note 100-42/256 0.3196 0.000
Five-year note 99-194/256 0.8001 0.005
Seven-year note 100-18/256 1.2394 0.004
10-year note 96-4/256 1.5643 0.002
20-year bond 95-172/256 2.1442 -0.003
30-year bond 91-172/256 2.2604 0.000
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 9.25 0.50
spread
U.S. 10-year dollar swap -0.75 0.50
spread
U.S. 30-year dollar swap -26.50 1.25
spread (Reporting by Kate Duguid in New York and by Ross Kerber in
Boston
Editing by Nick Zieminski)
