TREASURIES-Yields dip but stay elevated after record week of supply
(Adds Trump comments, updates prices) By Karen Brettell NEW YORK, Aug 14 (Reuters) - Benchmark U.S. Treasury yields dropped from seven-week highs on Friday but remained relatively elevated after the Treasury on Thursday completed $112 billion in record coupon-bearing supply that has put pressure on bonds all week. The Treasury saw weak demand for a record $26 billion sale of 30-year bonds on Thursday. It came after a record $48 billion sale of three-year notes on Tuesday and a record $38 billion sale of 10-year notes on Wednesday went well. “The main story this week was the three Treasury auctions,” said John Roberts, an interest rate strategist at NatWest Markets in Stamford, Connecticut. “What’s keeping (yields) elevated now is we had a poor 30-year auction and we’re getting $25 billion 20-years next week. I think people might want to wait around to see how that goes.” The Treasury last week increased auction sizes across the curve and said that it plans to continue to shift more of its funding to longer-dated debt in coming quarters as it finances measures to offset the impact of the coronavirus epidemic. Benchmark 10-year note yields fell two basis points to 0.701%, after reaching 0.727% on Thursday, the highest since June 24. Thirty-year bond yields <US30YT-RR> rose by less than a basis point to 1.435%, after reaching 1.444% on Thursday, the highest since July 7. Technical analysts at JPMorgan said that 30-year bond yields are sitting near a support area from 1.365% to 1.405%, which includes their 50- and 100-day moving averages and some momentum thresholds. “Sustained weakness through that support sustains a firm bearish bias,” they said in a report sent on Thursday, noting the next supports would be from 1.50% to 1.58%. "We believe the current move has scope to at least those levels," the analysts said. Bonds had little reaction to data showing that U.S. retail sales in July increased less than expected. A larger concern will be data for August, after tens of millions of unemployed people lost a $600 weekly jobless benefit supplement at the end of July, which had accounted for 20% of personal income. “I think people will be more worried about August retail sales more than today’s print,” Roberts said. President Donald Trump on Friday once again said he was ready to act to pump stimulus money into a U.S. economy hard-hit by the coronavirus crisis, a week after his negotiating team failed to reach a deal with congressional Democrats. August 14 Friday 2:14PM New York / 1814 GMT Price US T BONDS SEP0 178-1/32 0-7/32 10YR TNotes SEP0 139-44/256 0-52/256 Price Current Net Yield % Change (bps) Three-month bills 0.0975 0.0989 0.000 Six-month bills 0.12 0.1217 0.000 Two-year note 99-245/256 0.147 -0.018 Three-year note 99-212/256 0.1826 -0.018 Five-year note 99-200/256 0.2945 -0.023 Seven-year note 99-40/256 0.4986 -0.022 10-year note 99-68/256 0.7012 -0.015 20-year bond 98-216/256 1.1909 -0.003 30-year bond 98-140/256 1.4348 0.007 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.00 1.50 spread U.S. 3-year dollar swap 7.00 1.25 spread U.S. 5-year dollar swap 5.50 1.50 spread U.S. 10-year dollar swap -0.75 1.75 spread U.S. 30-year dollar swap -40.25 1.25 spread (Reporting by Karen Brettell; editing by Jonathan Oatis and Nick Zieminski)
