TREASURIES-Yields fall after first 20-year bond auction in decades

 (Recasts, adds 20-year auction results and analyst comments,
updates yields)
    CHICAGO, May 20 (Reuters) - U.S. Treasury yields slipped on
Wednesday after the first auction of 20-year bonds in decades
was met with "decent" demand.
    The benchmark 10-year yield was last down 2.9
basis points at 0.6818%, slightly below its level before the
sale results were announced and extending a decline from
Tuesday's late levels.
    For the first time since 1986, the U.S. Treasury sold $20
billion in 20-year bonds at a high yield of 1.22%. The
bid-to-cover ratio, a metric of overall demand, was 2.53.
Primary dealers, who must absorb any supply not bought by direct
and indirect buyers, took 24.6% of the deal.

    The market was shunning the new kid, according to Jim Vogel,
an interest rate strategist at FHN Financial in Memphis,
Tennessee,. 
    "It will likely take 3-4 months or a significantly steeper
curve to fold new (20-year bonds) better into the Treasury
complex...to where they're no longer just the kid brother of the
30-year (bonds)," he wrote in commentary following the auction.
    The auction was "pretty decent" even though there was a
small tail, said Subadra Rajappa, head of U.S. rates strategy,
Societe Generale in New York, referring to the slightly lower,
when-issued yield of 1.215% heading into the auction. 
    More 20-year bonds are coming as a total of $54 billion is
expected over three months. Rajappa said the question will be
"how much demand you're going to see on a consistent basis."
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was last down 1.2
basis points at 0.1613%.
    Bids submitted in a Wednesday morning overnight repurchase
agreement (repo) operation totaled $7 billion, according to the
New York Federal Reserve, which said it accepted all the bids.
  May 20 Wednesday 12:53PM New York / 1753 GMT
                               Price                  
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.1225       0.1246    -0.004
 Six-month bills               0.1475       0.1497    -0.005
 Two-year note                 99-238/256   0.1613    -0.012
 Three-year note               99-194/256   0.2065    -0.014
 Five-year note                100-54/256   0.3319    -0.016
 Seven-year note               99-224/256   0.5183    -0.023
 10-year note                  99-116/256   0.6818    -0.029
 30-year bond                  96-48/256    1.4063    -0.030
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         8.50        -0.25    
 spread                                               
 U.S. 3-year dollar swap         5.25        -0.25    
 spread                                               
 U.S. 5-year dollar swap         3.00        -0.25    
 spread                                               
 U.S. 10-year dollar swap       -2.25         0.25    
 spread                                               
 U.S. 30-year dollar swap      -47.75         0.50    
 spread                                               
 

 (Reporting by Karen Pierog in Chicago; Editing by Alden Bentley
and Leslie Adler)
  

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Most JGBs gain after solid 20-year debt auction

TOKYO, May 20 (Reuters) – Most Japanese government bond prices rose on Wednesday after a 20-year debt auction drew solid demand from dealers.

The bid-to-cover ratio, a gauge of demand, at the 900 billion yen ($8.35 billion) 20-year debt sale rose to 4.25 from 3.58 at the previous auction in April. Analysts said the demand was stronger than expected.

The auction’s tail, or gap between the average and lowest accepted prices, tightened to 0.06 from last month’s 0.11.

Benchmark 10-year JGB futures barely moved at 152.27, with a trading volume of 9,443 lots, and the 10-year JGB yield was flat at minus 0.005%.

The 20-year JGB yield fell 1.5 basis points to 0.330%. The 30-year JGB yield was down 2 basis points to 0.455%.

At the short end of the market, the two-year JGB yield and the five-year yield stood flat at minus 0.165% and minus 0.125%, respectively. ($1 = 107.7600 yen) (Reporting by Eimi Yamamitsu; Editing by Subhranshu Sahu)

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TREASURIES-Yields narrowly mixed, market optimistic about virus outlook

    * U.S. virus deaths top 25,000, but pace slowing -Reuters
    * NY hospitalizations fall for 1st time since outbreak
    * Fed's Bullard says V-shaped recovery still possible
    * U.S. yields starting to form a base -analyst

 (Adds new comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, April 14 (Reuters) - U.S. Treasury yields were
mixed in rangebound trading on Tuesday, as investors lacked
incentives to move decisively in either direction even as they
were cautiously optimistic about the outlook for the coronavirus
outbreak and looked forward to the reopening of the economy.
    "The balance of headlines on the coronavirus is
significantly more positive than negative," said Tom Simons,
money market economist at Jefferies in New York. 
    He added that people are looking at the type of U.S.
recovery that can happen once the virus is gotten under control.
    St. Louis Federal Reserve President James Bullard said on
Tuesday a V-shaped recovery is still possible if businesses and
households are still able to pay their bills and if testing for
the virus becomes widely available.
    Jefferies' Simons said if not a V-shaped recovery, the U.S.
we can probably have more like a check mark-shaped rebound, in
which a downturn is followed a prolonged but slow recovery. 
    The optimism was borne out of reports that the virus
outbreak was slowing in many parts of the country.
    U.S. deaths from the novel coronavirus topped 25,000 on
Tuesday, according to a Reuters tally. So far this week, deaths
have increased by about 7% per day on average compared with 14%
last week and 30% many days in March. Cases this week are up an
average of 5% per day compared with 7.8% last week and 30% per
day in March.
    In New York, the total number of people hospitalized fell
for the first time since the onset of the coronavirus outbreak,
a further sign the state at the epicenter may be at the peak of
its crisis, Governor Andrew Cuomo said on Tuesday.
    U.S. stocks were also higher on the day.
    In afternoon trading, U.S. 10-year yields edged
higher to 0.753% from 0.749% late on Monday.
    Evercore ISI fixed income strategist Stan Shipley said it
feels like the 10-year yield is starting to form a base.
    "When you come down this far from 2.0% in the 10-year, it
takes a while to form a base here," Shipley said. "We're not
saying rates are going to jump from here. Too early for that."
    Yields on U.S. 30-year bonds were at 1.409%, up
from 1.39% on Monday.
    On the short end of the curve, U.S. 2-year yields were last
at 0.231%, down from Monday's 0.243%.
    The yield curve has flattened a little bit on Tuesday, with
the spread between the 10-year and the 2-year narrowing to 50
basis points, from about 52 basis points on Monday. The curve
has been steepening since the beginning of the health crisis as
investors have priced out any rate increase in the immediate
future.
    BMO Capital Markets said steepening is the path of least
resistance for the yield curve.
    "The curve has become largely a directional trade as the
2-year sector remains well-anchored in the 20-30 bp
(basis-point) range with dim prospects for a breakout of any
significance," BMO said in a research note. 
        
      April 14 Tuesday 2:16 PM New York / 1816 GMT
                               Price                  
 US T BONDS JUN0               177-27/32    -0-9/32   
 10YR TNotes JUN0              138-60/256   0-40/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.205        0.2085    -0.056
 Six-month bills               0.225        0.2284    -0.051
 Two-year note                 100-74/256   0.227     -0.016
 Three-year note               99-226/256   0.2893    -0.021
 Five-year note                100-108/256  0.414     -0.016
 Seven-year note               100-32/256   0.6066    -0.018
 10-year note                  107-36/256   0.7456    -0.003
 30-year bond                  114-168/256  1.3975    0.008
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        20.75        -0.50    
 spread                                               
 U.S. 3-year dollar swap        14.50         0.25    
 spread                                               
 U.S. 5-year dollar swap        12.75        -0.50    
 spread                                               
 U.S. 10-year dollar swap        6.25         0.00    
 spread                                               
 U.S. 30-year dollar swap      -37.00         0.00    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Steve
Orlofsky and Jonathan Oatis)
  

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Eurozone bond yields steady as U.S. fiscal boost calms nerves

* Italy/Germany bond yield gap well off highs

* U.S., European fiscal stimulus give heart to investors

* But lock downs could severely hurt global economy

* Eurozone periphery bond yields tmsnrt.rs/2ii2Bqr

By Abhinav Ramnarayan

LONDON, March 25 (Reuters) – Bond market participants breathed a sigh of relief on Wednesday as eurozone government bonds steadied, following sessions of wild swings driven by the coronavirus crisis and concern over its impact on the global economy.

With policymakers in Europe and the United States approving extraordinary measures to help soothe markets and cushion the devastating impact of the crisis, global markets, including government bonds, were calmer on Wednesday.

The closely-watched spread between Italian and German 10-year bond yields was just a few basis points tighter at 185 basis points, well off last week’s 14-month highs of 319 bps.

“Judging by what we have seen in the last few days, that spread volatility should continue to stabilise from the highs we have seen recently after quite swift responses from the U.S.,” said DZ Bank rates strategist Christian Lenk.

U.S. senators and officials in President Donald Trump’s administration overnight agreed on a massive economic stimulus bill to alleviate the economic impact of the coronavirus outbreak.

There will be “no limits” to the eurozone’s response to the rapidly spreading coronavirus outbreak, Eurogroup chief Mario Centeno said on Monday.

Germany’s 10-year government bond, the benchmark for the region, saw its yield edge a basis point higher to -0.31%, a move mirrored by other high-grade government bonds. ,

Italian 10-year borrowing costs were unchanged at 0815 GMT at 1.59%; nearly half last week’s high of 3.01%.

Other government bond markets referred to as peripheral, such as Spain, saw a pick-up in demand and were 2-3 bps lower across the curve.,

“Risk assets bounced yesterday in the aftermath of positive noises for the U.S. fiscal deal’s progress and the Fed’s commitment to buy unlimited U.S. Treasuries and MBS,” Mizuho analysts said in a note.

“Further headlines around Germany’s renewed political commitment to spend, the likelihood of agreement on ESM borrowing, and the tentative signs that Italy’s death rate now appears to be levelling off gave them further support.”

Lenk of DZ Bank said the relative calm in markets depended on the success of the battle to contain the spread of the coronavirus, and also on how long the lock downs continue and the potential impact on supply chains and industry.

Surveys this week showed business activity collapsed from Australia, Japan and Western Europe to the United States at a record pace in March as measures to contain the coronavirus pandemic hammered the world economy. (Reporting by Abhinav Ramnarayan; editing by Barbara Lewis)

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