TREASURIES-Yields tumble on data, rising coronavirus cases

BY Reuters | TREASURY | 10/13/20 10:17 AM EDT
       By Karen Pierog
    CHICAGO, Oct 13 (Reuters) - U.S. Treasury yields moved lower
on Tuesday driven by soft economic data and a rise in COVID-19
cases globally that raised concerns of potential weakness ahead.

    The benchmark 10-year yield was last down 4.3
basis points at 0.7322%.
    Kathy Jones, chief fixed income strategist at the Schwab
Center for Financial Research in New York, pointed to "a lot of
soft data coming out of Europe," as well as the latest U.S.
consumer price data for the downward move as the market returned
from Monday's Columbus Day holiday.
    Yields extended their fall after a U.S. Labor Department
report showed consumer prices rose for a fourth straight month
in September but at a slower pace amid considerable slack in the
    Jones said more COVID-19 outbreaks in the United States and
other countries were seen as constraining economic activity.

    Meanwhile, the market was watching Washington for signs of a
new stimulus package to combat the economic fallout from the
pandemic. Jones said while nothing is expected
ahead of the Nov. 3 election, a deal is likely afterwards
regardless of the election outcome and that could lift yields.
    "I think the path of least resistance is probably higher
(yields) in Treasuries but it's a slow move because we still
don't have signs of inflation or excessively strong growth," she
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last down 1
basis point at 0.143%.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, which is viewed as an indicator of
economic expectations, was last at 58.80 basis points, 3 basis
points lower than at Friday's close.
    October 13 Tuesday 9:52AM New York / 1452 GMT

                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.1          0.1014    0.000
 Six-month bills               0.115        0.1167    0.000
 Two-year note                 99-247/256   0.143     -0.010
 Three-year note               99-212/256   0.1825    -0.015
 Five-year note                99-186/256   0.3056    -0.030
 Seven-year note               99-20/256    0.51      -0.039
 10-year note                  98-252/256   0.7322    -0.043
 20-year bond                  97-48/256    1.2861    -0.050
 30-year bond                  96-120/256   1.5227    -0.051

                               Last (bps)   Net
 U.S. 2-year dollar swap         8.75         0.25
 U.S. 3-year dollar swap         7.75         0.00
 U.S. 5-year dollar swap         7.25        -0.25
 U.S. 10-year dollar swap        3.00         0.00
 U.S. 30-year dollar swap      -34.25         0.50

 (Reporiting by Karen Pierog; Editing by Andrea Ricci)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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