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U.S. Treasury yields rose in early Wednesday’s trade, breaching key levels as investors saw a glimpse of hope in U.S. House Speaker Nancy Pelosi’s comments that Democrats and the Trump administration had made progress towards a fiscal stimulus deal.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.814% rose 1.7 basis points to a June high of 0.814%, after trading overnight as high as 0.836% , while the 30-year bond yield TMUBMUSD30Y, 1.618% added 1.4 basis points to 1.617%, also a June high. The 2-year note rate TMUBMUSD02Y, 0.145% edged 0.2 basis point up to 0.129%.
What’s driving Treasurys?
Pelosi indicated the latest talks with the Trump administration on Tuesday had inched forward, saying that both sides had found “common ground as we move closer to an agreement.”
But news reports say Senate Majority Leader Mitch McConnell, R-Ky., told the White House not to push for an agreement that would not pass muster with Republican senators, who would prefer a more smaller package than Democrats and the Trump administration have touted.
Other factors that may influence the bond market on Wednesday include the Federal Reserve’s Beige Book publication at 2 p.m. ET. A collection of anecdotes from businesses across the country, the data release could offer additional details of the U.S. recovery’s health.
Cleveland Fed President Loretta Mester and Fed Gov Lael Brainard are among the senior U.S. central bankers that will speak on Wednesday.
Investors will also digest an auction for $22 billion of 20-year U.S. Treasury notes in the afternoon. The sale could add to the bearish pressure on the broader bond market.
What did market participants say?
“U.S. fiscal stimulus talks have been a market driver for some time now and the latest developments – House Speaker Pelosi expressing some optimism on a deal being agreed by the end of this week – has given a small boost” to stocks and yields, said Mark Chandler, a rates strategist at RBC Capital Markets.
