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Sep 21, 2020

Bonds: Treasury yields fall amid concerns about pandemic and further stimulus

 

Yun Li, Elliot Smith


Treasury yields fell on Monday as signs of a worsening pandemic drove investors into safe assets.

The yield on the benchmark 10-year Treasury note dropped 3 basis points to 0.6601% and the yield on the 30-year Treasury bond also fell about 5 basis points to 1.4026%. Yields move inversely to prices.

Treasurys

TICKER COMPANY YIELD CHANGE %CHANGE
US3MU.S. 3 Month Treasury0.086-0.0050.00
US1YU.S. 1 Year Treasury0.119-0.0030.00
US2YU.S. 2 Year Treasury0.137-0.0020.00
US5YU.S. 5 Year Treasury0.266-0.0130.00
US10YU.S. 10 Year Treasury0.666-0.0280.00
US30YU.S. 30 Year Treasury1.42-0.0320.00

Investor anxiety around the coronavirus pandemic grew as the U.K. leader is reportedly considering another national lockdown to act as a “circuit-breaker” to stop the spread of the virus. The plans to introduce stricter measures on the public come as daily new infections rise, with almost 4,000 new cases reported Sunday.

“Concerns with rising Covid-19 cases in Europe and the risks of a fresh lockdown in London have contributed to the prevailing risk off sentiment,” Ian Lyngen, head of U.S. rates, said in a note Monday. “We’re reminded that the magnitude of the economic fallout from the coronavirus leaves the path to regaining the production losses long and fraught with hazards.”

Meanwhile, lawmakers’ effort to approve further coronavirus stimulus could be overshadowed by the passing of Supreme Court Justice Ruth Bader Ginsberg, with Trump and Senate Majority Leader Mitch McConnell vowing to fill her seat before the election amid strong criticism from both Democrats and some GOP lawmakers.

Investors will also be looking ahead to a host of speeches from Federal Reserve policymakers this week for further signals on the health of the economic recovery. Lael Brainard is due to speak at 1 p.m. ET on Monday, before Robert Kaplan and John C. Williams deliver addresses at 6 p.m.

Treasury auctions will be held for $54 billion of 13-week bills and $51 billion of 26-week bills.

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