Treasury yields muted with pandemic, stimulus and Powell testimony on focus

  • The passage of a fresh coronavirus relief bill through Congress could be delayed further as President Donald Trump tries to push through a Supreme Court replacement for the late Justice Ruth Bader Ginsburg ahead of the election on November 3.
  • Federal Reserve Chairman Jerome Powell will tell the House of Representatives Financial Services Committee on Tuesday that the central bank stands ready to utilize all the tools at its disposal to shore up the recovery and limit lasting damage
  • Auctions will be held for $30 billion of 119-day Treasury bills, $30 billion of 42-day bills and $52 billion of 2-year notes.

U.S. government debt prices were slightly higher in the early hours of Tuesday as concerns about new lockdown measures in Europe and a likely delay to a new federal stimulus package continued to weigh on sentiment.

At around 2:10 a.m. ET, the yield on the benchmark 10-year Treasury note edged down to 0.6642% and the yield on the 30-year Treasury bond slid to 1.4129%. Yields on shorter-dated bonds were broadly higher, however. Yields move inversely to prices.

Treasurys

Wall Street continued a recent sell-off on Monday as the S&P 500 posted its fourth consecutive day of losses, fueled in part by fears that the economic recovery could take longer than anticipated.

Various countries in Europe have begun to reintroduce partial lockdown measures as Covid-19 cases rise again, while the passage of a fresh coronavirus relief bill through Congress could be delayed further as President Donald Trump tries to push through a Supreme Court replacement for the late Justice Ruth Bader Ginsburg ahead of the election on November 3.

Meanwhile, the U.S. is nearing 200,000 deaths from the coronavirus pandemic, having recorded more than 6.85 million cases, according to data compiled by Johns Hopkins University.

Federal Reserve Chairman Jerome Powell will tell the House of Representatives Financial Services Committee on Tuesday that the central bank stands ready to utilize all the tools at its disposal to shore up the recovery and limit lasting damage, according to remarks released ahead of his testimony at 10:30 a.m. ET.

In a busy week for Fed policymakers, Chicago Fed President Charles Evans will speak at 10 a.m. ET on Tuesday. Meanwhile, on the data front, July and August existing home sales figures will be published at 10 a.m.

Auctions will be held for $30 billion of 119-day Treasury bills, $30 billion of 42-day bills and $52 billion of 2-year notes.

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