Treasury yields come off highs to start holiday-shortened week

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U.S. Treasury yields erased their early rise on Monday, with President Donald Trump signing a pandemic relief bill that provides $900 billion for pandemic relief and $1.4 trillion bill to fund the government.

The bond market will be closed on Friday due to the New Year’s Day holiday.

What are Treasurys doing?

The 10-year Treasury note yield
TMUBMUSD10Y,
0.934%

was up 0.8 basis points to 0.936%, after hitting an intraday high of 0.963%, while the 2-year note rate
TMUBMUSD02Y,
0.129%

edged 0.4 basis point higher to 0.125%.

The 30-year bond yield
TMUBMUSD30Y,
1.672%

rose 0.8 basis point to 1.674%, after briefly pushing above the 1.7% mark. Bond prices move in the opposite direction of yields.

What’s driving Treasurys?

Trump signed the $900 billion fiscal relief package and a government spending bill on Sunday, funneling aid to cash-strapped households and businesses and averting a federal government shutdown.

With the COVID-19 pandemic showing few signs of slowing down, Americans had clamored for more help to get through the hard winter months ahead.

Confirmation of fiscal relief initially stimulated a brief selloff in government bonds, but losses eased toward the end of the session.

Traders are facing a busy docket of new issuance throughout the week, with the Treasury Department auctioning off $58 billion of 2-year notes and $59 billion of 3-year notes on Monday. Market participants had little trouble digesting the new supply.

What did market participants say?

At the start of Monday, the Treasury yield curve turned “steeper attributed to Trump signing the stimulus bill and supply,” said Justin Lederer, an interest-rate strategist at Cantor Fitzgerald.

But trading waned and yields came off their early highs as investors looked toward year-end, said Lederer.



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