# 2-year/10-year Treasury yield curve hits steepest since 2017

The spread between the 2-year note and the 10-year note was at 83 basis points, around its steepest since late October 2017.

See: Treasury yield curve steepest since October 2017 on Brexit trade deal hopes

What’s driving Treasurys?

Haven assets took a hit after U.K. newspapers said a deal on a Brexit trade agreement could be reached as soon as Wednesday.

The British tabloid The Sun reported a deal was “in sight” as U.K. and European negotiators looked to hash out an agreement before the Brexit transition ended on Dec. 31.

The 10-year U.K. government bond yield
TMBMKGB-10Y,
0.287%
surged 10.5 basis points to 0.291% on Wednesday.

France said it would reopen its borders with the U.K. for those who tested negative for COVID-19, following reports of a new and more contagious strain of the respiratory disease emerging in the southwest of England. This comes after governments across Europe implemented travel restrictions against travel out of Britain.

President Donald Trump said on twitter that he wanted to amend the $900 billion pandemic relief package to include more direct stimulus checks, threatening to scupper hopes for immediate fiscal support to the U.S. economy. But investors said they still anticipated a fiscal package being implemented.

Investors also faced a rush of U.S. economic data before the Christmas holidays.

Weekly initial jobless benefit claims fell to 803,000 from 892,000. November durable goods rose 0.9% in November after a 1.8% gain in the prior month, the Commerce Department said Wednesday.

Meanwhile, consumer spending fell 0.4% in November and personal income slumped 1.1% last month. Sales of newly built homes fell 11% to an annualized pace of 841,000 841,000 in November. The final reading of the University of Michigan’s consumer sentiment gauge stood at 80.7 this month, from 76.9 in November.

What are market participants saying?

“Treasury prices are under severe selling pressure” due to Brexit headlines, said Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities.