TREASURIES-Yield curve flatter on coronavirus, election concerns

       By Ross Kerber
    Oct 26 (Reuters) - Longer-term U.S. Treasury yields fell on
Monday and left the yield curve flatter as investors worried
about a fast-rising case count in the COVID-19 pandemic and
sized up a complicated battle for control of the U.S. Senate.
    The benchmark 10-year yield was down 2.7 basis
points in morning trading at 0.8144%, well below its four-month
high reached on Friday.
    New infections touched record levels in the United States
recently, with El Paso, Texas, asking citizens to stay at home
for the next two weeks, while in Europe, Italy and Spain imposed
new restrictions.
    Traders now worry about additional lockdowns in the face of
the pandemic that would slow economies, a story the U.S.
Treasury market seemed to ignore for much of October, said Jim
Vogel, interest rate strategist for FHN Financial.
    He said investors also were taking note of the tight races
that make it hard to predict which party will control the U.S.
Senate in next month's elections and holding down Treasury
yields.
    "There's enough uncertainty with regards to how the Senate
elections come out, it's easier to wait rather than sell
Treasuries on the expectation of a certain outcome," Vogel said.
    Democratic control, coupled with a predicted win for the
party's presidential candidate Joe Biden, is generally expected
to send markets higher on the expectation of an end to
Washington gridlock, he 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 66 basis points, about 3 basis points lower
than Friday's close.
    The two-year  U.S. Treasury yield, which
typically moves in step with interest rate expectations, was
down less than a basis point at 0.1514% in morning trading.

    October 26 Monday 9:13AM New York / 1313 GMT
                               Price


                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.0925       0.0938    0.000
 Six-month bills               0.1125       0.1141    0.000
 Two-year note                 99-243/256   0.1514    -0.004
 Three-year note               99-202/256   0.1963    -0.006
 Five-year note                99-122/256   0.3573    -0.013
 Seven-year note               98-148/256   0.5848    -0.018
 10-year note                  98-56/256    0.8144    -0.027
 20-year bond                  95-188/256   1.3717    -0.037
 30-year bond                  94-128/256   1.608     -0.038

   DOLLAR SWAP SPREADS
                               Last (bps)   Net
                                            Change
                                            (bps)
 U.S. 2-year dollar swap         8.25         0.00
 spread
 U.S. 3-year dollar swap         7.75         0.00
 spread
 U.S. 5-year dollar swap         6.50        -0.25
 spread
 U.S. 10-year dollar swap        2.75         0.25
 spread
 U.S. 30-year dollar swap      -34.00         0.50
 spread



 (Reporting by Ross Kerber in Boston
Editing by Nick Zieminski)

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