US Treasury Yields Slowly Rise on Fiscal Spending Outlook

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Yields on US Treasuries rose slightly in early Thursday trading amid anticipation that the Biden administration would go ahead with additional measures of fiscal spending. The yield on the 10-year Treasury note TMUBMUSD10Y, 1.102% rose 1.1 basis points to 1.099%, while the rate of the 2-year note TMUBMUSD02Y, 0.149% remained stable at 0.147%. The yield on the TMUBMUSD30Y 30-year bond, 1.823% added 0.5 basis points to 1.823%. Bond prices move inversely to yields. What drives Treasuries? US Treasuries came under pressure early Thursday after news reports indicated that President-elect Joe Biden would propose $ 2 trillion of additional spending to help the economy weather the pandemic.

However, US weekly jobless claims increased by 181,000 to 965,000 in early January, while continuing state jobless claims rose from 199,000 to 5.07 million, reflecting the impact of the last business closures to combat the coronavirus pandemic. Still, many look to the future, when the widespread distribution of vaccines will allow much of the economy to reopen and contribute to the recovery. Investors will keep looking at the Federal Reserve. Recent comments from some members of the policy-making committee have heightened market fears that the central bank could reduce its asset purchases earlier than expected. But Fed Governor Lael Brainard and Vice President Richard Clarida have said they anticipate that the Fed’s bond buying program will continue at current rates through 2021. Fed Chairman Jerome Powell will deliver a speech to 12:30 p.m. ET Thursday. House of Representatives lawmakers voted to impeach President Donald Trump a second time. However, a final vote in the Senate was unlikely before President-elect Joe Biden’s inauguration, said Senate Majority Leader Mitch McConnell, R-Ky. What did market participants say? “The modest nature of [Thursday’s overnight selloff] it could reflect uncertainty over whether Democrats will be able to muster the necessary support from their more moderate members to secure passage of their boldest plans in the Senate. It could also reflect the fact that in the wake of the recent sell-off, a push towards more fiscal support is already in the price, ”said analysts at Rabobank.