Treasury yields edge lower as fiscal spending proposal draws spotlight to start week

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These are the last days of small government and the Biden administration will make sure of that


U.S. Treasury yields retreated on early Monday’s trade as investors eyed heated discussions over the size of another fiscal relief package.

What’s driving Treasurys?

The 10-year Treasury note yield
TMUBMUSD10Y,
1.080%

fell 1.5 basis points to 1.079%, while the 2-year note rate
TMUBMUSD02Y,
0.109%

edged 0.6 basis point down to 0.111%. The 30-year bond yield
TMUBMUSD30Y,
1.846%

slid 1.2 basis points to 1.846%. Bond prices move inversely to yields.

What’s driving Treasurys?

A group of Republican senators are meeting with President Joe Biden to discuss plans for additional fiscal stimulus this year. The senators offered a bill of $600 billion, more than a trillion dollars less than Biden’s proposed amount.

Though the Republican proposal is likely to receive pushback from Democrat lawmakers in Congress, there were signs that the Biden administration was open to compromise on some aspects of the plan.

The U.S.’s ISM manufacturing index for January is expected to come in at a reading of 60. The main highlight of this week will remain the nonfarm employment report on Friday, which could influence Federal Reserve officials and Washington lawmakers on the amount of stimulus needed to support the economic recovery.

What did market participants say?

“It was never expected to be smooth sailing for the third fiscal deal given the Democrats’ thin majority control of Congress and the disparity in the magnitude of the bailout plans simply serves to reinforce this reality,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets.



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