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Treasury yields rise slightly as investors monitor progress on stimulus

Treasury yields climbed on Monday amid renewed optimism that a coronavirus aid package could be agreed upon in the coming days.

The yield on the benchmark 10-year Treasury note rose 4 basis points to 0.781%, touching the highest level since Oct. 9. The rate last traded around 0.762%. Yields move inversely to prices.

The yield on the 30-year Treasury bond traded slightly higher around 1.546%. The long-duration yield earlier jumped 4 basis points to 1.574%, also the highest level in more than a week.

House Speaker Nancy Pelosi on Sunday called on the Trump administration to reconcile remaining disputes over a coronavirus stimulus package within 48 hours as lawmakers attempt to pass a bill before the 2020 election. Negotiations in Washington have dragged on for months.

“The overnight weakness in Treasuries offers further confirmation that the prospects for another injection of fiscal stimulus (however limited) outweigh the incoming economic data,” Ian Lyngen, BMO’s head of U.S. rates, said in a note on Monday.

However, the Washington Post reported Monday afternoon that a deal between Pelosi and the administration was not “sounding imminent.” The news sent stocks to their lows of the day. Long-dated yields remained higher following the headline.

Meanwhile, data out of China pointed to a continued economic rebound from the coronavirus lows.

The world’s second-largest economy reported third-quarter GDP rose 4.9% year over year, bringing growth for the first three quarters of 2020 to 0.7% from a year ago.

The benchmark 10-year rate has risen about 10 basis point this month, and the 30-year yield has climbed a similar magnitude in October. On March 8, the 10-year yield hit an all-time low of 0.318% amid a historic flight to bonds during the pandemic.

“Interest rates are beginning to climb as the risk-on trade develops, inflation expectations increase, and government spending continues,” said Mark Hackett, Nationwide’s chief of investment research. “Tight credit spreads have cushioned the impact for companies, but the yield curve has steepened.”

Still, investors remained concerned over the surge in Covid-19 cases across the U.S. A CNBC analysis of Johns Hopkins University data showed Covid-19 cases were growing by 5% or more in 38 states as of Friday, with the daily case average nationwide rising by more than 16% week on week to nearly 55,000.

Auctions were held Monday for $54 billion of 13-week Treasury bills and $51 billion of 26-week bills.

— CNBC’s Elliott Smith contributed reporting.

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