Treasury prices erased early losses, leaving yields little changed on Monday as worries that rising COVID-19 cases could curtail economic activity and spark renewed lockdowns put a damper on a stock-market rally.
What are yields doing?
The yield on the benchmark 10-year Treasury note TMUBMUSD10Y, 0.896% fell 0.1 basis point to 0.891%, while the two-year note yield TMUBMUSD02Y, 0.121% declined 0.4 basis points to 0.117%. The 30-year Treasury bond yield TMUBMUSD30Y, 1.629% rose 0.2 basis points to 1.628%. Yields and debt prices move in opposite directions.
What’s driving the market?
Yields initially rose, with investors shunning Treasurys as they pushed up stocks and other assets perceived as risky. Pfizer Inc. PFE, -4.64% over the weekend began shipments of the coronavirus vaccine it created with Germany’s BioNTech SE BNTX, -14.95% around the country, after the Food and Drug Administration late Friday granted emergency authorization for its use in the U.S.
The rollout comes as the number of COVID-19 cases continued to surge. Remarks by New York officials, who indicated a return to tighter restrictions on activity could be in the offing, were blamed in part for cooling the stock market rally. Equities saw a mixed finish.
Meanwhile, lawmakers continued to work toward a new round of aid spending.
A bipartisan group of Senate and House lawmakers, which has pushed for a compromise $908 billion plan, was reportedly set to release a two-part plan on Monday. Controversial elements of the package totaling around $160 billion of state and local aid and liability protections would be included in one part. The other would consist of a $748 billion aid plan that would provide $300 a week in additional state unemployment benefits for four months, $300 billion in aid to small businesses and $35 billion for health-care providers, according to several news reports.
Meanwhile, the Federal Reserve is set to meet Tuesday and Wednesday in its final policy meeting of 2020.
Read: What to watch for when the Fed concludes its meeting Wednesday
What are analysts saying?
“Warnings of another full-scale shut down in New York City were credited for some of the intraday moves, however the first vaccinations and associated perceived pandemic finish line left 10-year yields once again within striking distance of 90 basis points,” wrote analysts at BMO Capital Markets.
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