(Opens U.S. market)
By Herbert Lash
NEW YORK, Sept 22 - U.S. Treasury yields were little changed on Wednesday as fears of imminent
contagion from China Evergrande receded after it settled interest payments on a domestic bond and
investors awaited word from the Federal Reserve later in the day.
The People's Bank of China injected 90 billion yuan into the banking system, soothing fears of
financial fallout from a default by the debt-laden Chinese property developer.
The Fed is expected to unveil how it will taper its monthly asset purchases later this year
and show in updated projections whether higher-than-expected inflation or a resurgent COVID-19
pandemic further weighs on the economy.
A statement from a two-day meeting of the Fed's policy-setting committee is expected at 2 p.m.
ET.
The yield on the benchmark 10-year Treasury note was down 0.5 basis points at
1.319% as investors awaited the statement and remarks from Fed Chair Jerome Powell.
The market consensus expects the Fed as soon as November to begin to reduce its Treasury
purchases by $10 billion a month and mortgage-backed security purchases by $5 billion a month.
The timeframe could be much slower that people expect, with the consensus view executed on a
quarterly basis, not monthly, said Steven Ricchiuto, U.S. chief economist at Mizuho Securities USA
LLC.
"You need to make sure the system adjusts very slowly to the developments. There's a lot of
concern on the committee that if they pull back too quickly, they will cause a problem," Ricchiuto
said.
The Fed likely will reduce its growth numbers for 2021 and next year, while raising its
inflation target for the two years, Ricchiuto said. The unemployment rate target may also be
raised a touch, but stagflation will not be part of the picture.
"People will read a little bit of stagflation into the numbers, which I don't think is valid.
Stagflation isn't possible in the world we live in," Ricchiuto said.
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 109.6 basis points.
The two-year U.S. Treasury yield, which typically moves in step with interest rate
expectations, was up 0.6 basis points at 0.222%.
The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS)
was last at 2.455%.
The 10-year TIPS breakeven rate was last at 2.298%, indicating the market sees
inflation averaging about 2.3% a year for the next decade.
September 22 Wednesday 10:24AM New York / 1424 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 0.025 0.0253 0.000
Six-month bills 0.04 0.0406 -0.005
Two-year note 99-208/256 0.2221 0.006
Three-year note 99-190/256 0.4623 0.010
Five-year note 99-150/256 0.8358 0.007
Seven-year note 100-4/256 1.1226 0.000
10-year note 99-92/256 1.3192 -0.005
20-year bond 99-64/256 1.795 -0.011
30-year bond 103-96/256 1.8524 -0.005
DOLLAR SWAP SPREADS Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 11.25 0.00
spread
U.S. 3-year dollar swap 12.25 0.25
spread
U.S. 5-year dollar swap 10.50 0.25
spread
U.S. 10-year dollar swap 2.25 0.00
spread
U.S. 30-year dollar swap -25.00 -0.25
spread (Reporting by Herbert Lash; Editing by Will Dunham)
The Link LonkSeptember 22, 2021 at 09:37PM
https://www.reuters.com/article/usa-bonds/treasuries-treasury-yields-little-changed-as-evergrande-payment-eases-fears-idUSL1N2QO171
TREASURIES-Treasury yields little changed as Evergrande payment eases fears - Reuters
https://news.google.com/search?q=little&hl=en-US&gl=US&ceid=US:en
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