U.S. Treasury yields slipped in early Wednesday’s trade as investors watched if the bond market could extend its sharp selloff in the previous session.
What are Treasurys doing?
The 10-year Treasury note yield
TMUBMUSD10Y,
0.931%
fell a basis point to 0.924%, while the 2-year note rate
TMUBMUSD02Y,
0.160%
edged 1.2 basis points lower to 0.162%. The 30-year bond yield
TMUBMUSD30Y,
1.680%
was down 0.8 basis point to 1.668%.
What’s driving Treasurys?
Treasurys took a breather from Tuesday’s rapid selloff, spurred by expectations of another U.S. fiscal stimulus package.
Hopes were raised Tuesday after a bipartisan group of lawmakers laid out a $908 billion plan, but some disappointment was seen later in the session after Senate Majority Leader Mitch McConnell, R-Ky., who has called for a $500 billion package, said he wanted to pass a “targeted relief package,” according to news reports.
See: Endgame afoot on Capitol Hill as lawmakers mull fiscal stimulus, funding, defense bills
Traders putting on so-called steepening trades, buying short-term Treasurys and selling their longer-term peers, may have also contributed to the surge in yields after the end of November.
Higher inflation expectations also drew the attention of market participants, with holders of Treasury inflation-protected securities expecting inflation to average 1.83% over the next decade, the highest since last year.
In U.S. economic data, Automatic Data Processing Inc. reported private-sector employment in the U.S. grew by 307,000 in November, falling short of economists’ forecasts. But investors will mostly look ahead to the official U.S. Labor Department jobs report on Friday, which is expected to show job gains of 466,000.
The Federal Reserve’s Beige Book, released at 2 p.m. ET, will give insight to local business conditions across the country.
What did market participants say?
“2021 will be a story of rising inflation, rising long rates and central banks that will be stuck in having to confront it,” said Peter Boockvar, chief investment officer at the Bleakley Advisory Group.
