Treasuries Rally On Bad News, Yields Tumble

Treasuries Rally On Bad News, Yields Tumble

Investing.com  | Jan 26, 2021 07:13

Treasury yields tumbled on Monday as a raft of bad news sent investors to the safe haven of U.S. government bonds.

Where to begin? It turns out Democrats don’t have as complete control of the government as presumed. There's a pat situation in the Senate, a paper-thin majority in the House of Representatives, and a president who has yet to command allegiance.

This is bad news}} for the $1.9 trillion fiscal stimulus package President Joe Biden has pledged to push through with his putative control of Congress. Not so fast, say Republicans, not-so-secretly aided and abetted by some Democrats.

A bipartisan group of senators led by Republican Susan Collins of Maine and Democrat Joe Manchin of West Virginia pushed back on the price tag, and specifically a $1,400 payment to individuals whether they need it or not. They prefer something much more modest to start with – namely, some help getting vaccines to people.

Meanwhile, House Speaker Nancy Pelosi proceeded with her plan to hijack the Senate by forcing them to confront a motion to remove a president who is already out of office. Her declared goal is to force accountability and to ban former president Donald Trump from future public office.

Supreme Court Chief Justice John Roberts, who is supposed to preside over impeachment trials in the Senate, has already bowed out because the way he reads the Constitution he is only obliged to run trials for sitting presidents. The honor of presiding over this trial on a single charge of inciting insurrection will go to Patrick Leahy of Vermont, the Democrat who is president pro tem of the upper house.

Domestic Issues, Eurozone Worries 

On top of the domestic fracas, investors are taking fright at Europe’s economic prospects, as data from Germany hints at a double-dip recession. Then there is the government crisis in Italy, where the prime minister evidently thinks he can get majority support for his leadership without a snap election simply by resigning.

Yes, worries about Europe can depress Treasury yields. Even the Dutch are rioting against more closures as European leaders impose lockdowns and curfews to contain a resurgence of COVID-19 infections, including a new variant that may be more dangerous.

UST 10Y 60-Minute Chart

Yields on the benchmark 10-year Treasury note fell nearly 6 basis points on Monday, to 1.033% in late trading. The 30-year yield fell 6 bps to 1.796%. The yield curve also flattened, as the closely watched spread between two-year and 10-year notes fell to 91 bps, the narrowest gap in three weeks.

The drop of more than 10 bps in the 10-year yield from near 1.14% in more optimistic times earlier this month may continue, though analysts expect the decline to pause at the 1.0% threshold.

The Treasury has a heavy slate of notes being auctioned this week. On Monday, Treasury announced $60 billion of two-year notes were sold for a high yield of 0.125% and a 2.67 bid-to-cover ratio (bids per dollar of issue). Last month, Treasury sold $58 billion of two-years at a high yield of 0.137% and a ratio of 2.45.

The results of a $61 billion five-year note issue are due out Tuesday, and $62 billion of {{23704|seven-year notes on Thursday.

Investing.com

Related Articles

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+

Download the Investing.com App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.

Investing.com is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.