TREASURIES-Yields move back to middle ground as traders weigh tax plan

  • 4/23/2021
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(Updates with market activity, analyst comment) By Ross Kerber April 23 (Reuters) - Traders left U.S. Treasury yields in a narrow range on Friday as they weighed the political prospects of a new tax plan from President Joe Biden and the direction of Federal Reserve policy. The benchmark 10-year yield was up 1.1 basis point at 1.5666% in afternoon trading, within the 1.528% to 1.646% range it has held since April 15. After declining in the early part of the session the note"s yield climbed as high as 1.582% before noon after new data showed U.S. factory activity powered ahead in early April, and another report showed strong new home sales. But then it settled as investors waited for more clarity from Washington, said Andy Richman, managing director for Sterling Capital Management. Currently, "nobody wants to make a rapid move," he said. Stocks rose nearly 1% on Wall Street a day after reports of a Biden Administration push to raise taxes on capital gains gave indexes a shakedown. The proposed numbers had been public since the presidential campaign. Investors are looking ahead to guidance from a Fed meeting next week, on Tuesday and Wednesday, although the U.S. central bank"s Federal Open Market Committee is not expected to make meaningful adjustments to policy. Treasury auctions of 2-year, 5-year and 7-year notes on Monday and Tuesday totaling $183 billion will also show the market"s appetite for U.S. debt. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 141 basis points, about two basis point higher than Thursday"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 0.1575%. April 23 Friday 2:20PM New York / 1820 GMT Price Current Net Yield % Change (bps) Three-month bills 0.02 0.0203 0.000 Six-month bills 0.0375 0.038 0.000 Two-year note 99-240/256 0.1575 0.007 Three-year note 100-32/256 0.3327 0.013 Five-year note 99-178/256 0.8132 0.011 Seven-year note 100 1.25 0.014 10-year note 96 1.5666 0.011 20-year bond 95-196/256 2.1383 0.007 30-year bond 91-224/256 2.2506 0.010 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 13.50 0.00 spread U.S. 5-year dollar swap 9.50 0.00 spread U.S. 10-year dollar swap -0.25 0.50 spread U.S. 30-year dollar swap -26.50 0.25 spread (Reporting by Ross Kerber in Boston; Editing by Kirsten Donovan)

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