Oct 7, 2020

Bonds: Treasury yields climb after overnight fall as Trump halts stimulus talks


Elliot Smith

U.S. government debt prices were lower Wednesday morning, coming off a brief rally after President Donald Trump’s decision to spike discussions over a new coronavirus aid package.

At around 4:30 a.m. ET, the yield on the benchmark 10-year Treasury note was higher at 0.7635% and the yield on the 30-year Treasury bond was up at 1.5642%. Yields move inversely to prices.


US3MU.S. 3 Month Treasury0.0990.000.00
US1YU.S. 1 Year Treasury0.132-0.0020.00
US2YU.S. 2 Year Treasury0.1530.0060.00
US5YU.S. 5 Year Treasury0.3360.0210.00
US10YU.S. 10 Year Treasury0.7690.0290.00
US30YU.S. 30 Year Treasury1.5630.0260.00

Yields on both instruments had notched four-month highs following Trump’s release from hospital, but dropped on Tuesday night after the president abruptly torpedoed stimulus discussions between the White House and congressional Democrats until after the election, a move that has baffled both investors and political strategists.

Federal Reserve Chairman Jerome Powell on Tuesday warned that an incomplete economic recovery could give rise to “recessionary dynamics” and called for more help for households and businesses to weather the effects of the pandemic.

Powell joined a chorus of central bank voices emphasizing the importance of government spending to help shore up the economy as efforts to prevent a prolonged global recession enter a crucial phase.

The U.S. trade deficit surged to its widest in 14 years, Commerce Department figures revealed Tuesday, growing 5.9% to $67.1 billion and raising concern that trade could weigh on third-quarter economic growth.

There are no major economic data releases scheduled for Wednesday, although minutes from the latest meeting of the Federal Open Market Committee (FOMC) will be published at 2 p.m. ET and several Fed policymakers are due to deliver remarks during the afternoon.

Auctions will be held Wednesday for $25 billion of 105-day Treasury bills, $30 billion of 154-day bills and $35 billion of 10-year notes.

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