Band Herbert Lash

NEW YORK, May 26 (Reuters) – US Treasury yields were little changed on Thursday after the benchmark 10-year note hit a new six-week low as inflation fears continued to dissipate as economic data and corporate announcements point to slowing growth. .

The return on 10-year treasury bills US10YT=RR rose 0.9 basis points to 2.756% after falling to 2.706% at the start of the session.

A few weeks ago, expectations were high that the Federal Reserve would aggressively raise interest rates to fight inflation, but recent data suggests a weakening economy, said Lou Brien, market strategist at DRW Trading.

“The data drift lately has been pretty low, notably those new home sales were pretty damn bad,” he said.

New home sales plunged more than expected 16.6% in April to a seasonally-adjusted annual rate of 591,000 units, the Commerce Department said Tuesday.

“The market went a little too far on its skis, in terms of the evolution of the economy and how the Fed was going to evolve,” Brien said.

Minutes released Wednesday from a Fed policy meeting three weeks ago suggest the Fed may pause September rate hikes after two hikes of 50 basis points each in June and July put its key rate on close to neutral.

The market is waiting for macro-level data to confirm slower economic growth, but company microdata provides plenty of evidence, said Steven Ricchiuto, chief U.S. economist at Mizuho Securities USA LLC.

“A lot of what’s happening is corporate announcements. Apple today, don’t ignore it,” Ricchiuto said.

Apple Inc. AAPL.O expects to hold 2022 iPhone production roughly steady at around 220 million units, Bloomberg News reported, as China’s COVID-19 curbs, global supply chain issues and demand for cooling are hurting smartphone makers.

“People believe that the economy is affected and the affected economy will bring inflation down,” Ricchiuto said.

Two years US2YT=RR Treasury yields, which generally move in line with interest rate expectations, fell 0.8 basis points to 2.494%, a sharp drop from a more than three-year high of 2.844% at the start. may.

The Treasury Department sold $42 billion of seven-year notes at a high yield of 2.777%. The auction was very strong with the high yield more than 2 basis points lower than the yield at the auction deadline, Brien said.

A closely watched part of the U.S. Treasury yield curve measuring the spread between two- and 10-year Treasury yields US2US10=RRconsidered an indicator of economic expectations, stood at 26.0 basis points.

The yield of the 30-year Treasury bond US30YT=RR rose 1.9 basis points to 2.984%.

The five-year U.S. Treasury Inflation-Protected Securities (TIPS) break-even rate US5YTIP=RR was last at 2.989%.

The 10-year TIPS break-even rate US10YTIP=RR was last at 2.649%, indicating that the market expects inflation to average around 2.6% per year for the next decade.

The five-year US dollar inflation-linked swap USIL5YF5Y=Rconsidered by some to be a better indicator of inflation expectations due to possible distortions caused by the Fed’s quantitative easing, last stood at 2.493%.

May 26 Thursday 3:49 p.m. New York / 1949 GMT

Price

Current yield %

Net change (bps)

Three-month bills US3MT=RR

1.045

1.0623

-0.011

Half-yearly invoices US6MT=RR

1.47

1.5016

-0.002

Two-year ticket US2YT=RR

100-3/256

2.494

-0.008

Three-year ticket US3YT=RR

100-80/256

2.6396

0.009

Five-year ticket US5YT=RR

99-144/256

2.7192

0.003

Seven-year note US7YT=RR

100-176/256

2.7651

0.004

10 year ticket US10YT=RR

101-8/256

2.7559

0.009

20 year bond US20YT=RR

101-24/256

3.1755

0.028

30 year bond US30YT=RR

97-216/256

2.9843

0.019

DOLLAR EXCHANGE GAP

Last (bps)

Net change (bps)

2-year US dollar swap spread

30.25

2.50

3-year US dollar swap spread

16.00

1.00

5-year US dollar swap spread

4.75

1.25

10-year US dollar swap spread

7.00

0.50

30-year US dollar swap spread

-22.75

0.50

(Reporting by Herbert Lash in New York under the direction of Jonathan Oatis and Matthew Lewis)

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