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# Treasury yields rise as investors keep eye on stimulus talks in Washington

#
Treasury yields rise as investors keep eye on stimulus talks in Washington

U.S. Treasury yields edged up Tuesday, as investors kept an eye on negotiations in Washington toward another economic relief package as the number of COVID-19 cases climbed further.

What are yields doing?

The yield on the 10-year Treasury note
TMUBMUSD10Y,
0.910%
rose 3 basis points to 0.921%, while the 2-year note yield
TMUBMUSD02Y,
0.121%
added 0.4 basis point to 0.121%. The 30-year Treasury bond yield
TMUBMUSD30Y,
1.651%
gained 3.4 basis points to 1.664%. Yields and debt prices move in opposite directions.

What’s driving the market?

Appetite for Treasurys and other assets perceived as safe remained under pressure as U.S. stocks moved to the upside, buoyed by hope for a deal on another economic relief program from Congress as the year winds down.

A bipartisan group of House and Senate lawmakers on Monday proposed a two-part package that would separate the most difficult issues holding up approval from a $748 billion package that includes widely supported measures, including extended unemployment benefits and aid to business. Thornier issues, including liability protections for businesses and aid to state, local and tribal governments were put into a proposed $160 billion package.

Aid to governments was expected to be the focus, however, of a meeting between Treasury Secretary Steven Mnuchin and top congressional leaders Tuesday afternoon.

Meanwhile, the rollout of the COVID-19 vaccine developed by Pfizer Inc.
PFE,
-1.25%
and BioNTech SE
BNTX,
+2.71%
continued a day after the first vaccinations were delivered.

COVID-19 cases climbed further. The U.S. saw more than 1,600 fatalities from COVID-19 on Monday, bringing the death toll to more than 300,400. The country saw 201,073 new cases on Monday, according to a New York Times tracker. The U.S. has averaged 209,600 cases a day over the past week, up 31% from the average two weeks earlier.

The main event for bond traders this week will likely come from the conclusion on Wednesday of the Federal Reserve’s final policy meeting of 2020. Analysts expect more guidance on the central bank’s bond-buying program, but see little prospect for additional action at this week’s meeting.

Read: 4 things to watch when the Fed meets Wednesday

What are analysts saying?

Recent price action, which has seen yields whipsaw on headlines around the potential for COVID-related lockdowns and progress toward an aid package, showed that “sentiment and market ‘impressions’ govern daily market action, not fundamentals,” said Jim Vogel, executive vice president at FHN Financial, in a note.

“Hard facts and finality seep into valuations over time, a function of too much fast money chasing too-few themes every week and the difficulty of sifting through jumbled data to find the important trends,” he said.

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