(Updates market activity)
By Ross Kerber
BOSTON, March 20 (Reuters) - U.S. Treasury yields fell on
Friday as an order for New York state residents to stay at home
reinforced concerns about the economic impact of the coronavirus
pandemic, and the Federal Reserve stepped in with measures aimed
at boosting liquidity.
The yield on the benchmark 10-year note was down
24.4 basis points at 0.8853%, with a 43-basis-point swing in the
yield during the session continuing the volatility that marked
trading this week.
The movement left a closely watched part of the U.S. yield
curve, the gap between the 2-year and 10-year notes
, at 55 basis points, 8 basis points lower than
its close on Thursday but still at a level not seen until
recently since 2018.
New York Governor Andrew Cuomo's announcement that he would
issue an executive order mandating that 100% of the state's
non-essential workforce stay home and all non-essential
businesses close contributed to the afternoon Treasuries buying,
analysts said.
California and Illinois have also ordered people to stay
home.
Zhiwei Ren, managing director and portfolio manager for
Penn Mutual Asset Management, said the stay-at-home orders
likely were seen as disruptive by keeping financial teams apart.
Priya Misra, head of global rates strategy for TD
Securities, said investors also seemed to react to operations by
the Fed to stabilize the financial system. Late on Friday the
New York Fed posted a schedule indicating it would buy more than
$70 billion worth of Treasury securities on Monday, a relatively
large amount that Misra said was meant to send a strong message
the Fed would act as necessary to keep markets functioning.
"They are serious here," she said.
Separately, the New York Fed on Friday accepted a total of
$67 billion in bids in repurchase agreement operations,
according to its website.
Major U.S. stock indexes closed down about 4% on Friday,
which Misra said also made it likely investors were buying
safer-seeming Treasuries ahead of the weekend.
Andrew Richman, managing director of fixed income at
Truist/SunTrust Advisory Services, said that although actions by
the Fed and other parts of the U.S. government seemed to be
keeping the financial system liquid, there was little cause for
short-term optimism.
The yield on the 3-month Treasury bill remained
close to zero, and Richman and others said that while the
10-year yield was higher than last week, it was still at a
relatively low level.
Together, the numbers are "telling us that we'll have
negative growth and the Fed will be at virtually zero for a long
time," Richman said.
March 20 Friday 5:18PM New York / 2118 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 0.0475 0.0483 -0.015
Six-month bills 0.04 0.0406 -0.005
Two-year note 101-139/256 0.3254 -0.096
Three-year note 100-86/256 0.3865 -0.142
Five-year note 103-36/256 0.4806 -0.173
Seven-year note 102-104/256 0.7681 -0.223
10-year note 105-208/256 0.8853 -0.244
30-year bond 112-180/256 1.4731 -0.278
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 19.75 2.25
spread
U.S. 3-year dollar swap 13.25 4.75
spread
U.S. 5-year dollar swap 8.00 2.00
spread
U.S. 10-year dollar swap -8.75 6.75
spread
U.S. 30-year dollar swap -64.50 12.00
spread
(Reporting by Ross Kerber; Editing by Dan Grebler and Leslie
Adler)
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