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Longer-term yields edge down as COVID-19 cases surge

  • The benchmark 10-year yield was a basis point lower at 0.6643%.
  • "We're in a trading range," Richman said, one that will continue until a successful effort to contain the virus allows businesses to reopen with confidence.
26 Jun, 2020

Longer-term US Treasury yields ticked down on Friday as continuing public health concerns offset a rebound in consumer spending.

The benchmark 10-year yield was a basis point lower at 0.6643%.

The Commerce Department said consumer spending, which accounts for more than two-thirds of US economic activity, jumped 8.2% last month after falling 12.6% in April.

But the gains were not seen as sustainable amid high unemployment and as the United States set a new record for a one-day increase in COVID-19 cases.

Traders seem unlikely to move the 10-year yield away from the zone between 60 to 70 basis points where it has mostly traded since late March, said Andrew Richman, director of fixed income strategies for Truist/SunTrust Advisory Services.

"We're in a trading range," Richman said, one that will continue until a successful effort to contain the virus allows businesses to reopen with confidence.

Wall Street's main indexes opened lower on Friday and bank stocks fell following the Federal Reserve's move to cap shareholder payouts.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 49 basis points - well below its monthly high of 72 basis points reached on June 5.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was down less than a basis point at 0.1759% in morning trading.

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