U.S. Treasury yields slipped Tuesday amid concerns about an ongoing surge in coronavirus cases in many American states and in Europe, even though a vaccine rollout is underway and Congress passed another financial aid bill to help consumers and businesses.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.920% was down 2.4 basis points to 0.917%, while the 2-year note rate TMUBMUSD02Y, 0.121% edged 0.4 basis point lower to 0.119%. The 30-year bond yield TMUBMUSD30Y, 1.653% fell 3,1 basis points to 1.652%.
What’s driving Treasurys?
On Monday, Congress finally passed a $900 billion relief bill that included direct checks to households, loan for small businesses and enhanced federal unemployment benefits. The bill now awaits President Donald Trump’s signature.
Passage of the economic aid package, however, hasn’t dented demand for haven investments this week.
Investors say they remain concerned about the new, more contagious strain of COVID-19 discovered in the U.K. And few signs suggest the pandemic has yet to turn a corner in the U.S. and other European nations.
U.S. economic data released on Tuesday also drew some attention. The last revision of third quarter U.S.’s GDP showed the economy grew at 33.4%.
The National Association of Realtors said existing home sales declined 2.5% in November to an annualized 6.69 million pace. Meanwhile, the Conference Board’s consumer confidence gauge fell to 88.6 in December, from 92.9 in the prior month.
What did market participants say?
“The highly contagious new strain of COVID-19 that is spreading through the U.K. continues to undermine market sentiment,” said Philip Marey, a senior strategist at Rabobank.
“While the vaccines are arriving, the road to the exit remains dark and bumpy,” said Marey.