U.S. Treasury yields inch lower before debt auction

“Big risk-on day yesterday with the focal point continued discussions on the fiscal side. Short term, if a bill is passed it is looking more like a very targeted one geared toward the airlines,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities.

U.S. Treasury yields fell slightly early Thursday as investors eyed a large debt sale of long-dated government bonds later in the session.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, 0.768% fell 1.3 basis points to 0.772%, while the 2-year note rate TMUBMUSD02Y, 0.148% was down 0.6 basis point to 0.151%. The 30-year bond yield TMUBMUSD30Y, 1.565% slipped 1.8 basis points to 1.571%. Bond prices move inversely to yields.

What’s driving Treasurys?

The market will absorb some debt supply later, with the U.S. Treasury Department selling $23 billion of 30-year bonds. The recent rise in yields has helped draw in bond buyers this week but investors may balk at new issuance if they see this week’s selloff persisting.

Treasurys have come under pressure in the past few sessions amid signs that the uncertainty around the November presidential election may be easing, if Democratic candidate Joe Biden wins by a large margin.

Investors will also eye any progress towards piecemeal fiscal stimulus measures, endorsed by President Donald Trump.

In economic data, U.S. initial jobless claims fell 9,000 to 840,000 in early October from 849,000. And continuing jobless claims dropped 1 million to 10.98 million in late September.

What did market participants’ say?

“Big risk-on day yesterday with the focal point continued discussions on the fiscal side. Short term, if a bill is passed it is looking more like a very targeted one geared toward the airlines,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities.