TREASURIES-Yields fall after 30-year auction sees solid demand

 (Recasts with auction results, adds analyst quotes, updates
    By Karen Brettell
    NEW YORK, Sept 10 (Reuters) - U.S. Treasury yields fell on
Thursday and the yield curve flattened after the government sold
$23 billion in 30-year bonds to solid demand, the final sale of
$108 billion in new coupon-bearing supply this week.
    The 30-year debt sold at a high yield of 1.473%, slightly
below where the bonds had traded before the auction.

    "It was a fairly decent auction, I think the market is due
for a bit of a recovery," said Tom di Galoma, managing director
at Seaport Global Holdings in New York.
    "We got into a zone close to 1.50% on the 30-year bond with
the lack of any inflation and a stock market that might start
wobbling a bit into the September/October time frame ahead of
the election. I think that there was a reason to sort of back up
the truck and buy some long bonds," di Galoma said.
    The U.S. presidential election is Nov. 3.
    Thirty-year bond yields were last 1.433%, after getting as
high as 1.493% before the auction. Benchmark 10-year note yields
 fell two basis points on the day to 0.684%.
    The yield curve between two-year and 10-year notes
 flattened one basis point to 54 basis points and
the curve between five-year notes and 30-year bonds
 flattened one basis point to 117 basis points.
    The Treasury said on Thursday it will sell $22 billion in
20-year bonds on Tuesday.
    Bond weakness due to supply has been to some extent limited
this week by volatility in stocks, which has at times increased
demand for the safe haven debt.
    "In some ways rates are beholden to the path of stocks at
least in a short time frame, just because there are a lot of
concerns about these elevated equity valuations and if we see a
substantial leg lower in equities it's likely that we're going
to see a significant rally in bonds," said Jon Hill, an interest
rate strategist at BMO Capital Markets in New York.
    The S&P 500 fell in choppy trading on Thursday as
heavyweight tech-related stocks slid after a sharp rebound the
previous session.
    Data on Thursday showed that the number of Americans filing
new claims for unemployment benefits hovered at high levels last
week, strengthening views that the labor market was settling
into a more gradual path of recovery from the coronavirus
    The producer price index for final demand also increased
0.3% last month after surging 0.6% in July.
      September 10 Thursday 3:00PM New York / 1900 GMT
 US T BONDS DEC0               176-9/32     0-18/32   
 10YR TNotes DEC0              139-116/256  0-40/256  
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.1125       0.1141    0.002
 Six-month bills               0.12         0.1217    -0.005
 Two-year note                 99-248/256   0.1409    -0.004
 Three-year note               99-226/256   0.1642    -0.008
 Five-year note                99-238/256   0.2642    -0.014
 Seven-year note               100-64/256   0.4635    -0.019
 10-year note                  99-112/256   0.6837    -0.019
 20-year bond                  98-64/256    1.2242    -0.025
 30-year bond                  98-152/256   1.4329    -0.027
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         8.00        -0.25    
 U.S. 3-year dollar swap         6.50        -0.25    
 U.S. 5-year dollar swap         6.00         0.00    
 U.S. 10-year dollar swap        0.50         0.25    
 U.S. 30-year dollar swap      -37.25         0.75    
 (Reporting by Karen Brettell; Editing by Will Dunham)

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