TREASURIES-Longer-dated yields higher as investors watch for supply details

Ross Kerber
·2-min read

(Updates market activity, adds analyst comment) By Ross Kerber June 1 (Reuters) - Investors pushed longer-dated U.S. Treasury yields higher on Monday as they tried to forecast how the government would finance massive efforts to stimulate the economy. The benchmark 10-year yield was up 2.8 basis points at 0.6721% in afternoon trading. Wall Street's major indexes rose as economic data bolstered views of a quick post-pandemic recovery. For Treasuries, analysts said the trading showed investors shrugging off widespread civil unrest in U.S. cities over the weekend and instead focusing on how many 20- and 30-year bonds federal officials may sell. "The market is trying to figure out how the deficits will be funded," said Jim Barnes, director of fixed income at Bryn Mawr Trust. Generally, a greater supply will lead to lower prices and higher yields. At the same time a reluctance by the Federal Reserve to raise interest rates is keeping yields on shorter-term treasuries lower. "The Fed's outlook is known, they haven't been shy about it," said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott. The Fed also has been reducing its bond purchases, which it ramped up to historic highs in March. 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 seen as an indicator of economic expectations, was at 51 basis points, about 2 basis points higher than Friday's close. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up less than a basis point at 0.1603%. June 1 Monday 2:06PM New York / 1806 GMT Price US T BONDS SEP0 177-16/32 -0-28/32 10YR TNotes SEP0 138-240/256 -0-32/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.1375 0.1398 -0.002 Six-month bills 0.1625 0.1649 -0.002 Two-year note 99-238/256 0.1603 0.004 Three-year note 99-200/256 0.1994 0.010 Five-year note 99-182/256 0.3084 0.008 Seven-year note 99-240/256 0.5091 0.016 10-year note 99-140/256 0.6721 0.028 30-year bond 94-196/256 1.4666 0.063 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.75 -0.50 spread U.S. 3-year dollar swap 6.00 -1.00 spread U.S. 5-year dollar swap 5.25 0.00 spread U.S. 10-year dollar swap -1.00 -0.50 spread U.S. 30-year dollar swap -48.50 -1.00 spread (Reporting by Ross Kerber in Boston; Editing by Leslie Adler)