U.S. Treasury yields tick lower on Christmas Eve

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

U.S. Treasury yields fell Thursday in thin trading as investors cast their eyes to the brighter outlook for next year, turning in a mixed performance for a holiday-shortened week.

The U.S. bond market closed early at 2 p.m. ET and will stay shut on Friday in observance of Christmas.

What did Treasurys do?

The 10-year Treasury note yield

fell 2.2 basis points to 0.933%, while the 2-year note rate

edged 1.2 basis points lower to 0.121%. The 30-year bond yield

slid 2 basis points to 1.663.

For the week, the 10-year yield lost 2.3% and the 30-year was down 2.4%. But the long bond surged 11.4%.

What drove Treasurys?

Washington lawmakers were still haggling over a pandemic relief package on Monday, after President Donald Trump said he wanted the bill amended to include more generous direct checks to individuals.

On Thursday, House Republicans blocked a bill proposed by Democrats that would have sent $2,000 checks to individuals as part of the coronavirus financial aid package.

Negotiators agreed on a Brexit trade deal on Thursday before the Dec. 31 deadline. The agreement caps years of uncertainty over the post-Brexit future of the U.K.-EU economic relationship.

Investors said they were now looking ahead to next year where the hope is a resolution to geopolitical concerns and widespread vaccine distribution will bolster the U.S. economic recovery.

What did market participants say?

“The 1% upper bound on the 10-year note is a line the doom and gloom crowd, and the ‘grab for yield’ investors, are likely to defend for some time, especially with lockdowns expanding in Europe and in some Asian countries,” said Steven Ricchiuto, chief U.S. economist at Mizuho.

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