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TREASURIES-Yields rise as investors weigh U.S. pandemic response

By Ross Kerber

By Ross Kerber BOSTON, March 18 (Reuters) - U.S. Treasury yields were higher on Wednesday, though off their session peaks, as investors watched for the U.S. response to the coronavirus pandemic to take shape. The benchmark 10-year yield was up 13 basis points in morning trading at 1.1257%, after reaching above 1.22% early in the morning. Stan Shipley, macro research analyst for Evercore ISI, said many traders do not know what to do as they sort out various moves by central banks and the Trump administration responding to the health emergency and shoring up the economy. "Yields are very volatile right now. There's a lot of technical issues going on, he said. With the Federal Reserve having already lowered its target interest rates close to zero, the next step should be a massive U.S. spending plan, he said. "We need a big fiscal package, over $1.5 trillion, it could be $2 trillion." The trading followed an overnight sell-off in government bonds globally and in equity markets. Cases of the respiratory illness have been reported in all 50 U.S. states and millions of Americans are staying home from work. In response the Trump administration on Tuesday pressed for a $1 trillion stimulus package, possibly to include $1,000 direct payments to individual Americans. For its part, the Fed on Tuesday said it would reopen the so-called Commercial Paper Funding Facility to underwrite the short-term loans that companies often use to pay for their operations, a key financial market backstop first set up 2007 to 2009. It also extended its reach as the economy's lender of last resort to the two dozen Wall Street primary dealers, by letting them pledge municipal bonds, corporate debt and equity securities as collateral for 90-day Fed loans in order to keep credit flowing. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down less than a basis point at 0.4576% in morning trading. March 18 Wednesday 9:11AM New York / 1311 GMT Price Current Net Yield % Change (bps) Three-month bills 0.075 0.0763 -0.132 Six-month bills 0.185 0.1877 -0.051 Two-year note 101-75/256 0.4576 -0.003 Three-year note 99-188/256 0.5898 0.048 Five-year note 101-224/256 0.7384 0.088 Seven-year note 100-182/256 1.0187 0.125 10-year note 103-128/256 1.1257 0.130 30-year bond 106-144/256 1.7184 0.138 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.75 1.00 spread U.S. 3-year dollar swap 0.00 -3.00 spread U.S. 5-year dollar swap 1.50 -5.00 spread U.S. 10-year dollar swap -13.00 -6.75 spread U.S. 30-year dollar swap -72.25 -8.00 spread (Reporting by Ross Kerber)