Yields mixed as supply and Fed meeting loom

CHICAGO: US Treasury yields were mixed on Friday amid sinking stocks and ahead of next week's Federal Reserve meeting.

The benchmark 10-year yield was last up less than a basis point at 0.5888pc.

Priya Misra, head of global rates strategy for TD Securities in New York, said the 10-year yield, which is near the low end of the range where it has been trading at since March, may break lower as more supply looms to fund another potential round of fiscal aid from Washington to fight the economic fallout from the coronavirus pandemic.

"I think we're breaking out. We're going lower in yields because of what's happening with risk assets, data momentum seems to be slowing. So my view is it's going to decline," she said.

US Senate Republicans will unveil their proposal next week for a fresh round of coronavirus aid, including more direct payments to Americans and a partial extension of enhanced unemployment benefits, Senate Majority Leader Mitch McConnell said on Thursday.

Meanwhile, Fed policy makers will meet next week, although expectations are low for any surprises.

"I don't think people expect much from the Fed, but they do expect continued dovish rhetoric," Misra said.

Wall Street opened lower as US-China tensions and fears over mounting coronavirus cases weighed on the market.

After auctions this week of $17 billion of 20-year bonds and $14 billion of 10-year Treasury-Inflation Protected Securities (TIPS), the US Treasury will offer $141 billion of two-, five- and seven-year notes next week.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was down less than a basis point at 0.1453pc.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was last at 44.20 basis points, about 2 basis point higher than at Thursday's close.