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Benchmark yield lower but steady after stay-at-home extension

Kitco News

BOSTON, March 30 (Reuters) - U.S. Treasury yields were mostly lower but steady on Monday morning after U.S. President Donald Trump extended stay-at-home guidelines to battle the worsening coronavirus pandemic.

The benchmark 10-year yield was down 12 basis points in morning trading at 0.6243%, with most of the decline taking place overnight.

The movement left a closely watched part of the U.S. yield curve, the gap between the 2-year and 10-year notes, near 38 basis points, 5 basis points lower than its close on Friday and the lowest since March 17.

Trump on Sunday abandoned a hotly criticized plan to get the economy up and running again by mid-April, after a top medical adviser said more than 100,000 Americans could die from the coronavirus outbreak.

Jim Barnes, director of fixed income at Bryn Mawr Trust, said Trump's decision, coupled with a massive fiscal stimulus package passed by Congress last week, left investors taking stock of their positions.

"The market over the past three weeks has really whipsawed in both directions. Now everybody is taking a breather and trying to figure out where do we go from here," Barnes said.

Barnes pointed to several positive technical signs, including relatively strong liquidity measures, and that few investors seem to be needing to use emergency Fed facilities like additional repurchase agreement operations.

A term repurchase operation on Friday recent no bids, and one on Monday received just $1 billion, out of a possible $500 billion available on each day.

U.S. stocks opened higher on Monday.

The Federal Reserve has offered more than $3 trillion in loans and asset purchases in recent weeks to stop the U.S. financial system from seizing up, and on Friday, the U.S. Treasury got about $450 billion more from Congress as part of a $2.2 trillion U.S. stimulus package, greatly increasing its ability to support the economy.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 1.7 basis points at 0.2438% in morning trading.

The yield on the three-month U.S. Treasury bill was up 2.8 basis points at 0.0432%, after temporarily turning negative overnight.

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