U.S. Government Bonds Yields Remain Near Highest Level Since June
By Orla McCaffrey
U.S. government bond yields were on track to end the week near
multimonth highs, lifted by signs of economic recovery and the
hopes for economic stimulus before or after the presidential
The 10-year yield, which reached as high as roughly 0.87% in
early trading, has climbed for six straight sessions, buoyed by
investors' expectations that the economy is rebounding and
lawmakers will eventually reach a deal to help individuals and
companies weather the pandemic slowdown. A seventh session of gains
would mark the longest streak in more than three years.
A critical reference point for borrowing costs on everything
from mortgages to student loans, the 10-year yield had spent months
in a relatively tight range before its recent uptick. While many
worry the prospect of lawmakers reaching a stimulus deal before the
election remains dim, signs of progress in the talks helped push
yields above 0.8% for the first time since June earlier this
The yield on the benchmark 10-year Treasury note traded at a
recent 0.851% Friday, according to Tradeweb, from 0.847% on
Thursday and on track for its biggest weekly gain since August, The
yield on the 30-year bond was 1.667%, from 1.665% Thursday.
Investors are increasingly betting Democrats will end up with
control of Congress and the White House after the election,
boosting the chances of further fiscal stimulus and pressuring bond
prices, said Priya Misra, head of global rates research at TD
"If we keep pricing in a Biden win, it's all about how much
supply is coming down the pike," Ms. Misra said. "It's just a tug
of war between supply and demand. The supply side is winning out
Yields continued to rise Thursday after the Labor Department
said the number of Americans applying for unemployment benefits was
the lowest since the economic pain of the recession started to be
felt in March. On Friday, they pared an initial climb, falling
after a measure of manufacturing activity indicated that the U.S.
economy continues to grow, albeit at a slower pace, before
recovering some ground.
The rise in yields could be short-lived. When the 10-year yield
last rose above 0.8% in June, it stayed there for just a few
sessions, before being dragged down by mounting coronavirus cases
and the Federal Reserve's announcement that it had no plans to
raise short-term interest rates until the end of 2022.
Still, some analysts pointed to the growing gap between yields
on five-year and 30-year Treasurys as a sign that investors expect
growth and inflation to increase over the longer term, while
government spending adds to the supply of debt.
Write to Orla McCaffrey at firstname.lastname@example.org
(END) Dow Jones Newswires
October 23, 2020 12:31 ET (16:31 GMT)
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