TREASURIES-Prices slip on new supply as Biden presidency begins

Herbert Lash
·3 min read

By Herbert Lash NEW YORK, Jan 20 - Treasury prices fell slightly on Wednesday as investors awaited a government auction of $24 billion in 20-year Treasury bonds and the inauguration of President-elect Joe Biden, who plans on signing a slew of executive orders marking a new administration. The slide in Treasury prices pushed yields up, with the benchmark 10-year note trading at 1.100%. Biden was expected to sign the orders and memorandums in the Oval Office of the White House in the afternoon, making his first moves on the pandemic and climate change. Biden also will begin the process of re-entering the Paris climate accord and issue a sweeping order tackling climate change, including revoking the presidential permit granted to the disputed Keystone XL oil pipeline, aides said. The inauguration is something the market is looking past at this point, said Tom Simons, money market economist at Jefferies LLC, in New York. Investors are looking at new supply with results of the $24 billion auction of 20-year bonds to be released at 1 p.m. and another $15 auction of 10-year TIPS to be sold on Thursday. "The longer-duration auctions typically necessitate some kind of concession," Simons said. "It's not your usual big-slug of nominal supply that you see." Yields on the 20-year bond traded at 1.651, up from 1.64% at the close on Tuesday. Yields jumped last week ahead of Biden's announcement of his plans for $1.9 trillion in new stimulus, but have since traded in a narrow range, backing off from a sudden rise after the start of 2021. The likelihood of higher inflation has drawn investor attention when later in the year the economy is expected to pick up, while Federal Reserve officials have talked down speculation the U.S. central bank will pull back its bond-buying program. The yield curve between two-year and 10-year notes rose slightly to 96.35 basis points from 95.60 bid at the close on Tuesday. Stocks and oil prices gained, supported by anticipation that the new Biden administration will deliver massive stimulus spending. U.S. stocks opened to near record highs, with the Nasdaq and S&P 500 hitting all-time peaks. January 20 Wednesday 10:24AM New York / 1524 GMT Price Current Net Yield % Change (bps) Three-month bills 0.085 0.0862 -0.003 Six-month bills 0.095 0.0964 0.000 Two-year note 99-251/256 0.1351 0.004 Three-year note 99-198/256 0.2012 0.000 Five-year note 99-158/256 0.4534 0.006 Seven-year note 98-244/256 0.7802 0.007 10-year note 97-232/256 1.1006 0.009 20-year bond 95-92/256 1.6505 0.011 30-year bond 94-232/256 1.8479 0.009 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.25 0.25 spread U.S. 3-year dollar swap 7.00 0.50 spread U.S. 5-year dollar swap 7.25 0.25 spread U.S. 10-year dollar swap 0.00 0.25 spread U.S. 30-year dollar swap -26.25 0.00 spread (Reporting by Herbert Lash Editing by Mark Heinrich)