TREASURIES-Yield curve edges steeper before 10-year auction

    By Karen Brettell
    NEW YORK, Sept 9 (Reuters) - U.S. Treasury yields were
little changed on the day on Wednesday while the yield curve
steepened slightly, before the government will sell $35 billion
in 10-year notes.
    The Treasury has been increasing the size of its auctions
across the curve as it pays for stimulus meant to boost the
economy after coronavirus lockdowns, but some investors are
concerned that long-dated yields may need to rise further to
attract buyers.
    Analysts say that the benchmark 10-year notes are likely to
see solid demand, despite concerns about how much appetite there
 is for longer-dated debt after weak auctions of 20-year and
30-year bonds in August.
    “The concern is really over the 20s and 30s,” said Gennadiy
Goldberg, an interest rate strategist at TD Securities in New
York. “I think a lot of folks are on edge, waiting for all the
supply to clear this week before making a judgment and really
just breathing a sigh of relief.”
    Wednesday’s 10-year reopening is $6 billion larger than the
last reopening in July, but $3 billion less than August’s record
refunding. The Treasury will also sell $23 billion in 30-year
bonds on Thursday, up from $19 billion at July's reopening but
below the record $26 billion sold at the August refunding.
    The Treasury on Thursday will announce the size of its
20-year bond auction scheduled for next week.
    A record $50 billion sale of three-year notes on Tuesday saw
slightly soft interest.
    Benchmark 10-year note yields were unchanged on
the day at 0.684%. The yield curve between two-year and 10-year
notes steepened less than a basis point to 54
basis points.
    Another major focus is whether the United States Congress is
likely to pass new stimulus to boost the economy after the
spread of the novel coronavirus closed businesses across the
    If new spending is not imminent it could boost demand for
Treasuries, as the threat of further increases in supply in the
near term would ease. At the same time, concerns about further
economic weakness would grow.
    “That is $1-$1.5 trillion dollars of supply that won’t hit
the market, and that’s quite a bit of fiscal drag as well,”
Goldberg said.
    The Senate Democratic leader Chuck Schumer said on Wednesday
he believes there is a good chance Congress will pass a
coronavirus relief bill and predicted Republicans will feel
pressure to provide help for Americans suffering from the
      September 9 Wednesday 9:56 AM New York / 1356 GMT
 US T BONDS DEC0               176-9/32     0         
 10YR TNotes DEC0              139-100/256  0         
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.115        0.1166    -0.002
 Six-month bills               0.125        0.1268    -0.002
 Two-year note                 99-247/256   0.1429    0.002
 Three-year note               99-222/256   0.1694    -0.002
 Five-year note                99-228/256   0.2722    0.000
 Seven-year note               100-54/256   0.4692    0.000
 10-year note                  99-112/256   0.6837    0.000
 20-year bond                  98-92/256    1.218     0.004
 30-year bond                  98-184/256   1.4277    0.005
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         8.50         0.25    
 U.S. 3-year dollar swap         7.00         0.00    
 U.S. 5-year dollar swap         6.00         0.00    
 U.S. 10-year dollar swap        0.00         0.00    
 U.S. 30-year dollar swap      -38.25         0.00    


 (Editing by Nick Zieminski)

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