TREASURIES-Longer-term yields dip with focus on stimulus

BY Reuters | TREASURY | 10/14/20 10:12 AM EDT
       By Karen Pierog
    CHICAGO, Oct 14 (Reuters) - Yields on longer-term U.S.
Treasuries drifted a touch lower on Wednesday as the market
awaited developments from Washington on measures to combat the
economic fallout from the coronavirus pandemic.
   The benchmark 10-year yield was last down less
than a basis point at 0.7239%.
    "Aside from potentially seeing headlines about vaccines and
that sort of thing, stimulus is probably the most important news
item that the market is trading on," said Tom Simons, a money
market economist at Jefferies in New York. "But at this point,
it's hard to expect that anything is going to get done this year
on that."
    On Tuesday, the sides appeared to be far apart with Senate
Majority Leader Mitch McConnell announcing a vote next week by
his Republican-controlled chamber on $500 billion of targeted
aid and Democratic House Speaker Nancy Pelosi advocating much
greater spending.
    Simons said given the political impasse over stimulus, the
market will be monitoring speeches by U.S. Federal Reserve
officials on Wednesday for specific comments on policy
    "We've had some Fed speak here but it's mostly the same as
we've seen the last couple of weeks," he said.
    A bigger-than-expected increase in U.S. producer prices in
September did not rattle the market. The Labor Department
reported the producer price index (PPI) for final demand rose
0.4% last month after advancing 0.3% in August and was up 0.4%
in the 12 months through September.
    Economists polled by Reuters had forecast the PPI gaining
0.2% in September and rebounding 0.2% on a year-on-year basis.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last up less
than a 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 57.90 basis points, less than
a basis point lower from Tuesday's close.
    October 14 Wednesday 9:50 AM New York / 1450 GMT

                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.105        0.1065    0.001
 Six-month bills               0.115        0.1167    0.000
 Two-year note                 99-247/256   0.143     0.002
 Three-year note               99-214/256   0.1799    0.003
 Five-year note                99-186/256   0.3056    0.004
 Seven-year note               99-28/256    0.5054    0.000
 10-year note                  99-16/256    0.7239    -0.003
 20-year bond                  97-100/256   1.2743    -0.009
 30-year bond                  96-236/256   1.5034    -0.011

                               Last (bps)   Net
 U.S. 2-year dollar swap         9.00         0.25
 U.S. 3-year dollar swap         8.50         0.25
 U.S. 5-year dollar swap         7.50         0.00
 U.S. 10-year dollar swap        3.25         0.00
 U.S. 30-year dollar swap      -33.50         0.00

 (Reporting by Karen Pierog)

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