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Oct 22, 2020

Bonds: Treasury yields climb amid strong economic data, stimulus optimism

 

Yun Li, Elliot Smith


Treasury yields rose on Thursday after data showed U.S. jobless claims hit the lowest level since March.

The yield on the benchmark 10-year Treasury note gained 3 basis point to 0.839% while the yield on the 30-year Treasury bond was also higher at 1.650%. Yields move inversely to prices.

Treasurys

TICKER COMPANY YIELD CHANGE %CHANGE
US3MU.S. 3 Month Treasury0.091-0.0050.00
US1YU.S. 1 Year Treasury0.127-0.0020.00
US2YU.S. 2 Year Treasury0.1550.0060.00
US5YU.S. 5 Year Treasury0.3750.0240.00
US10YU.S. 10 Year Treasury0.8480.0320.00
US30YU.S. 30 Year Treasury1.660.0310.00

The Labor Department said Thursday new filings for jobless claims in the U.S. totaled 875,000 last week, the lowest total since the early days of the coronavirus pandemic. Economists surveyed by Dow Jones had been expecting 875,000.

Continuing claims also showed another solid decline. The level of those getting benefits for at least two weeks dropped by 1.02 million to 8.37 million.

“Time will tell if the still record number of people out of work will act as a brake on the economic recovery or whether the economy’s fortunes depend more on the course of the virus,” Chris Rupkey, chief financial economist at MUFG, said in a note.

Yields also turned higher after House Speaker Nancy Pelosi signaled progress on a new fiscal stimulus package. Pelosi said in a press conference Thursday that “we’re just about there.” She and Treasury Secretary Steven Mnuchin plan to talk again Thursday as they try to hammer out a deal on a fresh coronavirus aid bill before the Nov. 3 election.

“If we were not making progress, I wouldn’t spend five seconds in these conversations,” Pelosi said Thursday. “This is not anything other than I think a serious attempt. I do believe that both sides want to reach an agreement.”

The duo’s negotiation on Wednesday brought them closer to being able to put pen to paper to write legislation,” Pelosi’s Deputy Chief of Staff Drew Hammill wrote on Twitter just after Wednesday’s closing bell on Wall Street.

Also on Thursday, data from the National Association of Realtors showed existing home sales surged by 9.5% in September to an annualized rate of 6.54 million units. Economists polled by Dow Jones expected a gain of 6.2% to 6 million units.

National security officials announced Wednesday night that both Iran and Russia had obtained U.S. voter registration data and sought to influence public opinion and intimidate voters ahead of the election.

Auctions will be held Thursday for $30 billion of 4-week Treasury bills and $35 billion of 8-week bills, along with $17 billion of 5-year TIPS.

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