Treasury yields hold ground as Trump suggests he could stall progress of pandemic relief bill

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What could rattle markets in 2021, even as vaccines are rolling out


U.S. Treasury yields were slightly higher early Wednesday as investors eyed President Donald Trump’s comments that he wanted to revise the pandemic relief package.

How are Treasurys doing?

The 10-year Treasury note yield
TMUBMUSD10Y,
0.922%

was up 0.7 basis point to 0.925%, while the 2-year note rate
TMUBMUSD02Y,
0.116%

held at 0.119%. The 30-year bond yield
TMUBMUSD30Y,
1.658%

rose a basis point to 1.664%.

What’s driving Treasurys?

President Donald Trump said on twitter that he wanted to amend the $900 billion pandemic relief package to include more direct stimulus checks, threatening to scupper hopes for immediate fiscal support to the U.S. economy.

But the lack of market reaction in equities and government bond markets indicated investors still anticipate a fiscal package being implemented.

France said it would reopen its borders with the U.K. for those who tested negative for COVID-19, following reports of a new and more contagious strain of the respiratory disease emerging in the southwest of England. This comes after governments across Europe implemented travel restrictions against travel out of Britain.

Investors also face a rush of U.S. economic data before the Christmas holidays. Weekly initial jobless benefit claims, November durable goods and last month’s personal income numbers are due at 8:30 a.m. ET. Then, November new home sales and the University of Michigan’s consumer sentiment index for December will be out at 10 a.m.

What are market participants saying?

“Overall the video didn’t make it particularly clear as to whether President Trump will actually veto the bill or not,” said analysts at Rabobank.

“We would still favor the bill being signed into law this year,” they said.



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