Treasury returns after stimulus, vaccine information, increased
Traders signal offers in the pit for ten-year treasury bills with the Chicago Board of Trade.
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The U.S. Treasury Department’s 10-year rate of return rose to its highest level in more than a year on Friday morning after President Joe Biden signed his stimulus package and announced that states would instruct all adults to get the coronavirus vaccine by May 1 to qualify.
The yield on the 10-year benchmark Treasury note rose to 1.628% at 10:45 am CET and briefly reached 1.63%. The yield on the 30-year government bond rose 10 basis points to 2.385%. The returns move inversely to the prices and 1 basis point equals 0.01%.
Government bond yields rose after Biden signed the $ 1.9 trillion coronavirus relief package Thursday afternoon.
The plan calls for direct payments of up to $ 1,400 to most Americans. Direct deposits will come into Americans’ bank accounts as early as this weekend, White House press secretary Jen Psaki said Thursday.
In addition to announcing his plan to make Covid vaccines available to all adults ages 18 and older, Biden said in his first prime-time address Thursday night that hopefully Americans should be able to gather in small groups around the to celebrate the fourth of July.
Yields were also higher after the number of weekly new jobless claims fell lower than expected on Thursday, reaching 712,000 for the week ended March 6, down from the estimate of 725,000.
The 10-year yield has been rising rapidly lately, increasing from 1% since late January amid concerns about rising inflation. These concerns were compounded by fears that the US government’s fiscal bailout package, in addition to reopening the economy, could stimulate it too quickly and cause prices to rise.
Investors will watch out for the Federal Reserve’s decision on interest rates over the next week and for comments on the central bank’s stance on rising bond yields.
“If the bond sell-off intensifies ahead of the March 17th FOMC decision, the Fed may need to finally crack down on the movement in government bond yields,” OANDA’s Edward Moya told clients. “The Fed has clearly been sticking to the script that tighter financial conditions or disorderly markets would warrant action. If yields stay at a rapid rate, they will get clamor.”
There are no auctions on Friday.
– with reports from Jesse Pound and Yun Li from CNBC.