TREASURIES-Yields fall on growth fears before Powell testimony

BY Reuters | ECONOMIC | 06/22/22 09:28 AM EDT
       By Karen Brettell
    NEW YORK, June 22 (Reuters) - U.S. Treasury yields fell to
almost two-week lows
     on Wednesday as commodity prices softened and as fears that
the Federal Reserve will cause a recession by tightening
monetary policy boosted demand for the U.S. bonds before Federal
Reserve Chairman Jerome Powell is due to testify before
    Oil prices tumbled on Wednesday on news of a plan by U.S.
President Joe Biden to cut fuel costs for drivers and as
recession fears dented demand and weighed on stocks.

    "The overnight session featured a pretty big drubbing in
energy, commodities prices and that's putting a little bit of a
deflationary bid into the curve," said Guy LeBas, chief fixed
income strategist at Janney Montgomery Scott in Philadelphia,"
adding that "fears about economic growth have really gotten to
take center stage away from fears of inflation."
    Investors are concerned that the U.S. central bank will dent
growth as it aggressively raises interest rates to tackle
soaring price pressures.
    Powell is expected to maintain his hawkish stance towards
further interest rate hikes on Wednesday, following the U.S.
central bank's 75 basis points rate increase last week, the
biggest since 1994.
    Economists polled by Reuters expect the Fed to hike by
another 75 basis points in July, followed by a
half-percentage-point rise in September, and that it would not
scale back to quarter-percentage-point moves until November at
the earliest.
    Two-year Treasury yields fell to 3.094%. They have fallen
from 3.456% on June 14, which was the highest since November
    Benchmark 10-year yields were at 3.162%, after reaching
3.498% on June 14, the highest since April 2011.
    The closely watched yield curve between two-year and 10-year
notes was at 7 basis points, after inverting
early last week. An inversion in this part of the curve is seen
as a reliable indicator that a recession is likely in one to two

      June 22 Wednesday 9:10AM New York / 1310 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             1.6          1.6288    -0.059
 Six-month bills               2.38         2.4424    -0.019
 Two-year note                 98-228/256   3.0939    -0.104
 Three-year note               99-2/256     3.2269    -0.128
 Five-year note                97-56/256    3.2388    -0.140
 Seven-year note               96-242/256   3.2451    -0.148
 10-year note                  97-148/256   3.1618    -0.143
 20-year bond                  96-116/256   3.4988    -0.142
 30-year bond                  92-196/256   3.2553    -0.135

                               Last (bps)   Net
 U.S. 2-year dollar swap        39.50        -0.50
 U.S. 3-year dollar swap        17.00         0.25
 U.S. 5-year dollar swap         4.00         0.00
 U.S. 10-year dollar swap        6.75         0.25
 U.S. 30-year dollar swap      -27.25         0.25

 (Reporting by Karen Brettell;
Editing by Chizu Nomiyama)

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