(New throughout, updates prices, yields, comments and market
activity)
By Herbert Lash
NEW YORK, Jan 20 (Reuters) - U.S. Treasury yields ended
little changed on Wednesday after the inauguration of President
Joe Biden, who has pledged to revive a battered U.S. economy
with $1.9 trillion in stimulus, and as $24 billion of 20-year
Treasury bonds were sold at auction.
Treasury prices initially slid but as they moved higher,
yields fell, with the benchmark 10-year note trading
lower at 1.082%, or down 1 basis point from late Tuesday.
Biden was set to sign 15 executive orders and memorandums in
the White House, making his first moves on the coronavirus
pandemic and climate change in moves that undo policies put in
place by outgoing President Donald Trump.
Treasuries investors took the inauguration in stride, but
the stock market rallied, with the S&P 500 and the Nasdaq
indexes hitting all-time highs on optimism that Biden would
oversee a more efficient distribution of COVID-19 vaccines and
enact bigger pandemic relief.
The market was looking past the inauguration at this point,
said Tom Simons, money market economist at Jefferies LLC, in New
York.
Yields jumped last week ahead of Biden's stimulus
announcement, but have since traded in a narrow range, backing
off from a sudden rise at the start of 2021.
The government sale of 20-year Treasury bonds was a bit
weak, yielding a full basis point higher at 1.657% than the
market price at the bidding deadline, said Lou Brien, market
strategist at DRW Trading in Chicago.
"It was not dramatically weak," Brien said.
Yields on the 20-year bond trended lower,
trading toward the end of the session at 1.631%, compared to
Tuesday's close of 1.64%.
A recent run-up in yields since the start of 2021 has
stalled for the moment, Brien said.
The government will sell $15 billion in 10-year Treasury
Inflation Protected Securities, or TIPS, at auction on Thursday.
TIPS yields traded lower at -1.051%, while a
surge in the 10-year inflation breakeven rate, the yield
difference between 10-year Treasuries and 10-year TIPS, edged up
to 2.123%, the highest since October 2018.
This shows the markets expect inflation to average more than
2% a year for the next decade, well above the current rate and
the Federal Reserve's 2% target. But investors could be
underestimating how long the economic drag from the pandemic
will last, even with new stimulus.
The yield curve between two-year and 10-year notes
edged lower as yields fell to 95.30 basis points,
down from 95.60 bid at the close on Tuesday.
January 20 Wednesday 4:27PM New York / 2127 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 0.08 0.0811 -0.008
Six-month bills 0.09 0.0913 -0.005
Two-year note 99-254/256 0.129 -0.002
Three-year note 99-204/256 0.1933 -0.008
Five-year note 99-170/256 0.4438 -0.003
Seven-year note 99-16/256 0.7639 -0.009
10-year note 98-24/256 1.0802 -0.012
20-year bond 95-176/256 1.6305 -0.010
30-year bond 95-92/256 1.8275 -0.012
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 7.75 0.75
spread
U.S. 3-year dollar swap 7.50 1.00
spread
U.S. 5-year dollar swap 7.75 0.75
spread
U.S. 10-year dollar swap 0.50 0.75
spread
U.S. 30-year dollar swap -26.25 0.00
spread (Reporting by Herbert Lash
Editing by Mark Heinrich and Nick Zieminski)
.Source
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