TREASURIES-Longer-term yields tumble as Fed policy details sought

 (Recasts, updates yields, adds analyst comment)
    By Karen Pierog
    CHICAGO, Aug 31 (Reuters) - U.S. Treasury yields on the
longer end of the curve fell on Monday with investors scurrying
back to the market following last week's run-up in yields in the
wake of the Federal Reserve's new policy framework announcement.
   The benchmark 10-year yield was last down 3.1
basis points at 0.6982%.
    The 30-year yield, which on Friday reached
1.577%, its highest level since mid-June, was last down 4.3
basis points at 1.4648%. 
    "The market was selling off last week in a kind of a bear
steepening move just after Jackson Hole, but it seems as though
dip buying has started anew," said Gennadiy Goldberg, an
interest rate strategist at TD Securities in New York.
    At its virtual Jackson Hole economic symposium, the Fed
announced it was shifting its strategy to allow higher inflation
to offset periods of weak price increases in hopes of letting
job markets tighten, wages rise and workers gain more of the
benefits from economic expansion.
    The market will be digging into remarks from several Fed
officials scheduled to speak this week for policy details. With
a rise in the 30-year yield last week, some investors said the
U.S. central bank may need to address the possibility of
expanding its purchases of longer-dated debt at its
mid-September policy meeting.
   "That's the sort of incremental detail people are looking to
understand and it's certainly within the realm of
possibilities," said Bill Merz, head of fixed income research at
U.S. Bank Wealth Management in Minneapolis.
    He added that the market will also focus on Friday's release
of August employment data.
    "The jobs reports are just critical insight into the pace of
the recovery," he said. "It has the potential to put incremental
pressure on Congress to start taking the next round of fiscal
negotiations more seriously." 
    Democrats in Congress and the White House on Friday remained
at odds on how much to spend in the next round of stimulus to
aid the coronavirus-hit economy.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, which is viewed as an indicator of
economic expectations, was last at 56.60 basis points, 2.8 basis
points lower than at Friday's close.
August 31 Monday 1:28 PM  Chicago/ 1828 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.105        0.1065    0.002
 Six-month bills               0.11         0.1119    0.000
 Two-year note                 99-253/256   0.1309    -0.004
 Three-year note               99-240/256   0.1462    -0.008
 Five-year note                99-238/256   0.2642    -0.011
 Seven-year note               100-28/256   0.4841    -0.021
 10-year note                  99-76/256    0.6982    -0.031
 20-year bond                  98-4/256     1.2375    -0.044
 30-year bond                  97-212/256   1.4648    -0.043
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         8.75         0.00    
 spread                                               
 U.S. 3-year dollar swap         8.50         0.25    
 spread                                               
 U.S. 5-year dollar swap         6.50         0.25    
 spread                                               
 U.S. 10-year dollar swap        0.25         0.00    
 spread                                               
 U.S. 30-year dollar swap      -38.00         0.25    
 spread                                               
                                                      
 


 (By Karen Pierog; Editing by Steve Orlofsky)
  

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