U.S. government bond yields rise as investors eye Yellen’s confirmation hearing

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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 inched higher on early Tuesday’s trade before a hearing to confirm former Fed Chairwoman Janet Yellen as Treasury Secretary within the incoming Biden administration.

What are Treasurys doing?

The 10-year Treasury note yield
TMUBMUSD10Y,
1.110%

rose 1.9 basis points to 1.116%, while the 2-year note
TMUBMUSD02Y,
0.141%

edged 0.4 basis point higher to 0.141%. The 30-year bond yield
TMUBMUSD30Y,
1.851%

added a basis point to 1.862%. Bond prices move in the opposite direction of yields.

What’s driving Treasurys?

Yellen’s prepared remarks for her Senate confirmation hearing indicate her openness to widening the use of fiscal spending during the pandemic to avoid a sustained economic downturn.

See: Yellen says smartest thing to do now is ‘act big’ to help struggling Americans

Investors are eyeing the Biden administration’s willingness to deploy additional funds, a move that could boost inflation expectations and lift debt issuance.

Yellen’s confirmation hearing is slated to commence 10 a.m. Eastern.

Biden, who is set to be inaugurated in about 24 hours, said recently that he was open to deficit financing to help see the economy through its current public-health crisis.

There was no economic data on Tuesday, though traders would obtain a glimpse of foreign investor activity in the U.S. Treasurys market through the Treasury International Capital report due at 4 p.m.

What did market participants say?

“Soon to be Treasury Secretary Yellen will be a staunch supporter of more spending. Like Fed Governor Brainard, she believes in the K-shape recovery, and will fight very hard to lift up those most impacted by the pandemic,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities.



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