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U.S. Treasury yields rose Wednesday, as optimism ran high for another round of economic relief out of Washington and the conclusion of the Federal Reserve’s last policy meeting of 2020 loomed.
What are yields doing?
The yield on the benchmark 10-year Treasury note TMUBMUSD10Y, 0.946% rose 2.5 basis points to 0.943%, while the 2-year note yield TMUBMUSD02Y, 0.125% was up 0.8 basis point at 0.125%. The 30-year Treasury bond yield rose 3.1 basis points to 1.693%. Yields rise as bond prices fall.
What’s driving the market?
Yields remained higher after even data showed U.S. retail sales fell 1.1% in November, while October sales were revised lower, after a resurgence in coronavirus cases restricted consumer activity in recent weeks. Economists surveyed by MarketWatch had expected a 0.4% fall in sales.
The Fed will conclude its two-day policy meeting with a statement at 2 p.m. Eastern, followed by Chairman Jerome Powell’s news conference at 2:30 p.m. Investors will be paying close attention to any clues on the Fed’s thinking regarding the pace and duration of its bond-buying program.
Meanwhile, investors remain focused on talks toward a long-elusive deal on an economic relief package by lawmakers. Congressional leaders met face to face late Tuesday and news reports said negotiators were on the verge of a deal.
What are analysts saying?
“Market chatter suggests that policymakers may increase purchases of longer-dated Treasurys in order to contain a rise in yields,” said Charalambos Pissouros, senior market analyst at JFD Group, in a note.
“Thus, if they just do that, the market is unlikely to move much. For equities and other risk-linked assets to gain more, officials have to expand their easing efforts and signal that more may be in the works,” he said.
