This post was originally published on this site
The 10-year Treasury note on Monday saw a pick up in selling pressure, pushing the yield on the benchmark debt to its highest level in more than a year, after the Senate over the weekend approved the Biden administration’s $1.9 trillion COVID-19 relief bill, moving the package closer to reality.
How are Treasurys performing?
- The 10-year Treasury note yield TMUBMUSD10Y, 1.601% rose 4.4 basis points to 1.595%, briefly touching a level around 1.61 early Monday. Yields for the maturity have climbed for five weeks straight.
- The 2-year note TMUBMUSD02Y, 0.156% rate was at 0.137%, off 0.4 basis point, following a virtually flat weekly move on Friday.
- The 30-year Treasury bond TMUBMUSD30Y, 2.315% added 0.6 basis point to 2.292
Bond prices fall as yields rise.
What’s driving the Treasury market?
Yields on government debt have been persistently buoyant, weighing on assets viewed as richly valued.
The Senate on Saturday passed a $1.9 trillion COVID-19 relief package, which now goes back to the Democratic-controlled House for a vote as soon as Tuesday, potentially giving President Joe Biden an early legislative victory.
However, expectations for rising inflation, fueled by the fiscal spending and coupled with a rapidly reopening economy amid vaccine rollouts, have unsettled the fixed-income market and jitters have been rippling through the rest of Wall Street since late February.
What are strategists saying?
“While the nominal 10-year Treasury yield has risen since February, much of the advance can be attributed to an increase in the “real” yield—the yield adjusted for inflation expectations,” wrote Kate Nixon, chief investment officer at Northern Trust Wealth Management.
“This is certainly consistent with economic data and corresponds to the pulling forward of a durable economic reopening as vaccine development and distribution continues at an accelerated pace,” she wrote in a Monday research note.
