Ten-Year Yield Climbs To Highest Closing Level In Nearly A Year
After turning higher over the course of the previous session, treasuries showed a notable move back to the downside during trading on Friday.
Bond prices climbed off their worst levels going into the close but remained firmly negative. As result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.8 basis points to 1.345 percent.
With the increase on the day, the ten-year yield more than offset the drop seen on Thursday, reaching its highest closing level in almost a year.
The weakness among treasuries came amid continued optimism about more fiscal stimulus, as new Treasury Secretary Janet Yellen urged lawmakers to approve President Joe Biden’s $1.9 trillion relief package.
Yellen suggested during an interview with CNBC on Thursday that the Biden administration’s proposal could help the U.S. get back to full employment within a year.
The former Federal Reserve Chair also dismissed Republican complaints about the size of the proposed bill, arguing, “The price of doing too little is much higher than the price of doing something big.”
The comments from Yellen came after House Speaker Nancy Pelosi, D-Calif., said House Democrats aim to pass their version of the $1.9 trillion relief bill before the end of the month.
Democrats have been hoping to pass a new stimulus bill with Republican support but may be forced to use the process known as reconciliation to approve a relief package without GOP votes.
Traders have generally remained optimistic about more stimulus under Biden and the Democrat-controlled Congress.
Further reducing the appeal of bonds, the National Association of Realtors released a report showing another unexpected increase in U.S. existing home sales in the month of January.
NAR said existing home sales rose by 0.6 percent to an annual rate of 6.69 million in January after climbing by 0.9 percent to a revised rate of 6.65 million in December. Compared to the same month a year ago, existing home sales in January were up by 23.7 percent.
The continued growth came as surprise to economists, who had expected existing home sales to tumble by 2.2 percent to a rate of 6.61 million from the 6.76 million originally reported for the previous month.
Next week’s trading may be impacted by reaction to reports on consumer confidence, new home sales, durable goods orders and personal income and spending as well as Congressional testimony by Federal Reserve Chair Jerome Powell.
Bond traders are also likely to keep an eye on the results of the Treasury Department’s auctions of two-year, five-year, and seven-year notes.
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