TREASURIES-U.S. Treasury yields dive as market looks for aggressive Fed action

By Karen Pierog CHICAGO, March 12 - U.S. Treasury yields tumbled on Thursday as stocks took another beating and anticipation grew for aggressive easing on the part of the Federal Reserve to help deal with the economic fallout from the spreading coronavirus. The 10-year note yield was last at 0.666%, down from 0.822% at Wednesday's close. "We're back to basic panic flight to quality, flight to safety again," said Kim Rupert, senior economist at Action Economics in San Francisco. She added that the plan President Donald Trump announced late Wednesday to protect the economy from the ravages of the coronavirus was "just not real clear at this point." "The markets were hoping for a lot more fiscal action and quicker," Rupert said. After its surprise 50 basis-point cut last week, more Fed action was expected. "Bottomline the Fed's cutting to zero at some point in the next two meetings," said John Herrmann, a rates strategist at MUFG Securities in New York. In an effort to address liquidity concerns, the New York Federal Reserve raised the overnight repurchase agreement (repo) operation limit twice this week, with the latest move lifting the limit to $175 billion through mid-April. On Thursday, it accepted all $103.10 billion in bids from primary dealers. Thirty-year Treasury yields were at 1.259%, down from 1.315% Wednesday's close. Two-year Treasury yields were trading at 0.427%. On the data front, there was little reaction in the market to an unexpected fall in jobless claims last week and a drop in producer prices in February. The Treasury will sell $16 billion of 30-year bonds on Thursday. March 12 Thursday 10:04AM New York / 1404 GMT Price Current Net Change Yield % (bps) Three-month bills 0.25 0.2543 -0.180 Six-month bills 0.28 0.2851 -0.109 Two-year note 101-93/256 0.4274 -0.069 Three-year note 100-2/256 0.4974 -0.103 Five-year note 102-210/256 0.5484 -0.116 Seven-year note 103-34/256 0.664 -0.120 10-year note 108 0.6657 -0.156 30-year bond 118-108/256 1.2592 -0.056 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap -0.25 0.75 spread U.S. 3-year dollar swap -4.75 2.00 spread U.S. 5-year dollar swap 0.75 -0.50 spread U.S. 10-year dollar swap -2.25 -2.00 spread U.S. 30-year dollar swap -55.75 -9.75 spread (Additional reporting by Karen Brettell in New York)