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CORRECTED-TREASURIES-Treasuries tick up in the midst of a slow data week

Kate Duguid
·3 min read

(Corrects to say auction is today, not Thursday) By Kate Duguid NEW YORK, April 21 (Reuters) - U.S. Treasury yields inched higher on Wednesday morning in step with a small rise on Wall Street, trading within a range that analysts expect to persist until next week's data releases and Federal Reserve meeting. There has been little in the way of notable data releases scheduled this week, and Treasury yields have therefore been trading within tight ranges. 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 trading up 0.8 basis point at 1.570%. The two-year yield remained anchored, which drove the yield curve - as measured by the spread between two- and 10-year yields - up modestly to 141.5 basis points, from 140.8 yesterday. The S&P 500 index was last up 0.32% on the day. "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. The move in the Treasury market "is going to be sideways until we get some data or any sort of catalyst for a move higher. I think the next catalyst is really going to come from overseas when you start to see a pick-up in vaccination rates in Europe," said Rajappa. Ultimately the move in Treasury yields in the second quarter is expected to be higher, given the positive outlook for economic data as mass COVID-19 vaccinations allow the country to reopen. Later on Wednesday, the Treasury Department will sell $24 billion of 20-year bonds. While there has been improving demand for new Treasury debt this month and last, 20-year bond auctions have been plagued by weak demand since the maturity was reintroduced to the market in 2020. "I think generally speaking, it's probably going to be in line with past auctions," said Rajappa. She noted, however, "The focus might also be on the change in the composition of asset purchases from the New York Fed that might be favoring a bit more demand for the 20-year." April 21 Wednesday 10:38 AM New York / 1438 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 99-242/256 0.1532 0.000 Three-year note 100-40/256 0.3223 0.002 Five-year note 99-192/256 0.8017 0.007 Seven-year note 100-10/256 1.2441 0.009 10-year note 95-244/256 1.5714 0.009 20-year bond 95-136/256 2.1531 0.006 30-year bond 91-144/256 2.2657 0.006 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 9.50 0.75 spread U.S. 10-year dollar swap -0.50 0.75 spread U.S. 30-year dollar swap -26.25 1.50 spread (Reporting by Kate Duguid)