Treasury yields recede as investors eye U.S., EU stimulus prospects

“Today, all eyes on Congress in the United States. Three weeks to put their best foot forward with Phase 4 of liquidity,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities. “The real fiscal stimulus is yet to come and we are already at three trillion.”

U.S. Treasury yields edged lower on Monday as investors tracked developments around fiscal stimulus packages by U.S. and European Union leaders as part of efforts to cushion the economic damage from the COVID-19 pandemic.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, 0.609% was down 0.8 basis point to 0.620%, while the 2-year note rate TMUBMUSD02Y, 0.145% was virtually unchanged at 0.145%. The 30-year bond yield TMUBMUSD30Y, 1.306% fell 0.8 basis point to 1.321%.

Bond prices rise as yields falls.

What’s driving Treasurys?

Investors await details on fiscal stimulus measures across the U.S. and EU. Analysts have noted central bankers have employed outsize monetary-policy efforts, and urged governments to deliver additional fiscal measures to help economies recover from the viral outbreak.

EU leaders were in Brussels to discuss bailout funds for economies worst-hit by the coronavirus. The summit has been extended to four days as EU leaders looked to resolve opposition to a proposed multibillion-dollar recovery fund.

As for the U.S., negotiations for a second stimulus package are set to begin as lawmakers return from a two-week recess. Congress will race the clock to come up with a deal as additional jobless benefits provided through the last stimulus bill are set to expire at the end of this week.

The coronavirus situation in the U.S. continued to draw attention but has lost its importance as a driver of renewed trading in the bond-market, said traders. The U.S. has recorded nearly 3.8 million COVID-19 cases and more than 140,000 deaths, according to data aggregated by Johns Hopkins University.

What did market participants’ say?

“Today, all eyes on Congress in the United States. Three weeks to put their best foot forward with Phase 4 of liquidity,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities. “The real fiscal stimulus is yet to come and we are already at three trillion.”