Yields fall before Fed meeting statement
By Karen Brettell NEW YORK, June 10 (Reuters) - U.S. Treasury yields fell on Wednesday before the Federal Reserve is expected to signal its intention to keep interest rates near zero for the next few years as it attempts to stimulate the U.S. economy. The U.S. central bank will publish its economic projections and investors will also be watching to see if it indicates any intention to implement yield curve control, which analysts say is most likely for short-dated notes. The U.S. economy entered recession in February as a result of the coronavirus pandemic, the private economics research group that acts as the arbiter for determining U.S. business cycles said on Monday. The yield curve has steepened as investors bet that short-term rates will be held down by the Fed´s low rate policy, while long-dated debt will be hurt by improving economic expectations and increasing Treasury supply. "Realistically the front-end shouldn´t go anywhere," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. "I´d be hard pressed to see the Fed raise rates in the next few years." Two-year Treasury note yields, which are the most sensitive to Fed policy, fell 2 basis points to 0.191%. Benchmark 10-year note yields dipped 3 basis points to 0.797%. The yield curve between two-year and 10-year notes flattened to 61 basis points. It reached 72 basis points on Friday, the steepest since March, after data showed the U.S. economy unexpectedly added jobs in May. The curve between five-year notes and 30-year bonds flattened to 119 basis points, after reaching 129 basis points on Friday, the steepest since December 2016. U.S. data on Wednesday showed that U.S. consumer prices fell for a third straight month in May and underlying inflation was weak 10 Wednesday 9:33AM New York / 1333 GMT Price US T BONDS SEP0 174-30/32 0-20/32 10YR TNotes SEP0 138-12/256 0-84/256 Price Current Net Yield % Change (bps) Three-month bills 0.17 0.1729 0.001 Six-month bills 0.19 0.1928 0.005 Two-year note 99-223/256 0.1906 -0.015 Three-year note 100-6/256 0.2422 -0.021 Five-year note 99-98/256 0.3755 -0.032 Seven-year note 99-60/256 0.6124 -0.035 10-year note 98-92/256 0.7972 -0.032 20-year bond 96-64/256 1.34 -0.024 30-year bond 92-144/256 1.5621 -0.022 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.00 0.75 spread U.S. 3-year dollar swap 6.25 1.00 spread U.S. 5-year dollar swap 5.25 0.75 spread U.S. 10-year dollar swap -1.25 0.50 spread U.S. 30-year dollar swap -46.25 1.00 spread (Editing by Nick Zieminski)
