Yields of the one-month Treasury bill fell more than 20 basis points to 3.77%, bringing it back below 4% after spiking higher Tuesday. The security, which is often seen as a proxy for cash, could be among the most affected by a continued standoff over raising the U.S. borrowing limit.
The U.S. House of Representatives may vote on a bill that would sharply cut spending in exchange for a short-term increase in the debt ceiling on Wednesday.
"The re-emergence of First Republic issues and other potential regional bank issues are certainty causing a bit of a flight to quality, and then you fold into that the drama around the debt ceiling and it looks like the Treasury market will continue to be volatile," said Stephen Hooker, a portfolio manager at Newfleet Asset Management.
Shares of First Republic tumbled another 33% to a record low Wednesday after a CNBC report that U.S. government officials were currently unwilling to intervene in the bank's rescue process.
The yield on 10-year Treasury notes was up 3.9 basis points to 3.437%, while the yield on the 30-year Treasury bond was up 4.1 basis points to 3.693%.
Bond yields move in the opposite direction of prices.
The Treasury sold $43 billion in 5-year notes Wednesday, in
an auction that Ben Jeffrey, a strategist on the rates team at
BMO Capital Markets, characterized as strong.
"Since the result, the curve has ticked steeper as we
watch for more information on the regional banking sector," he
said.
New orders for key U.S.-manufactured capital goods fell 0.4% in March, more than the 0.1% expected by economists polled by Reuters, while data for February was revised downward to show a 0.7% decline, rather than the previous estimate of a 0.1% decline, the Commerce Department said.
The tech-heavy Nasdaq Composite index rose Wednesday following strong forecasts from bellwethers including Microsoft Corp and Google-parent Alphabet Inc .
"The economy still has residual strength despite a raft of reports indicating an advancing slowdown," said Quincy Krosby, chief global strategist for LPL Financial.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes , seen as an indicator of economic expectations, was at -51.0 basis points.
April 26 Wednesday 2:54PM New York / 1854 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 4.995 5.1291 0.009
Six-month bills 4.795 4.996 0.021
Two-year note 99-222/256 3.9447 0.049
Three-year note 100-44/256 3.6879 0.048
Five-year note 100-152/256 3.4923 0.048
Seven-year note 100-248/256 3.4661 0.045
10-year note 100-132/256 3.4372 0.039
20-year bond 100-228/256 3.8102 0.042
30-year bond 98-200/256 3.6926 0.041
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 31.25 5.75
spread
U.S. 3-year dollar swap 18.00 0.75
spread
U.S. 5-year dollar swap 7.25 0.25
spread
U.S. 10-year dollar swap 0.00 0.50
spread
U.S. 30-year dollar swap -42.25 -0.25
spread
(Reporting by David Randall; Editing by Jonathan Oatis, Andrea Ricci and Diane Craft)
Messaging: david.randall.thomsonreuters.com@reuters.net))