Treasury yields climb ahead of stimulus deadline

“Short term, the market will continue to watch the dynamics in Washington but should be more resigned to no deal before the election,” Gregory Faranello, head of U.S. rates trading at AmeriVet Securities.

Treasury yields rose on Tuesday as investors closely monitored the potential for a new coronavirus stimulus package ahead of next month’s presidential election.

The yield on the benchmark 10-year Treasury note gained 2 basis points to 0.789%, the highest level since Oct.9. The yield on the 30-year Treasury bond rose 4 basis points to 1.585%, also the highest level since Oct.9. Yields move inversely to prices.

 

The moves higher came as lawmakers make a last push toward a stimulus deal before the election. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi “continued to narrow their differences” during a nearly one-hour phone call on Monday, according to the California Democrat’s spokesman Drew Hammill.

Pelosi hoped for “clarity” by the end of Tuesday on whether a stimulus bill can be passed before the Nov. 3 election, Hammill said via Twitter. Over the weekend, she had slapped a Tuesday deadline on the talks.

President Donald Trump’s administration and Democratic leaders appear to be far apart on a range of key issues.

“Short term, the market will continue to watch the dynamics in Washington but should be more resigned to no deal before the election,” Gregory Faranello, head of U.S. rates trading at AmeriVet Securities, said in a note on Tuesday.

On the data front, housing starts for September and building permits for September will both be released at 8:30 a.m. ET, with Philly Fed non-manufacturing data for October set to follow slightly later in the session.

The U.S. Treasury is set to auction $30 billion of 119-day bills and $30 billion of 42-day bills on Tuesday.

Meanwhile, Fed Vice Chair Randal Quarles, Chicago Fed President Charles Evans, Fed Governor Lael Brainard and Atlanta Fed President Raphael Bostic are all scheduled to comment on the world’s largest economy during separate online events.