By Sunny Oh
U.S. Treasury yields rose Tuesday amid news of another COVID-19 aid relief proposal crafted by a bipartisan group of senators which was welcomed by Federal Reserve chair Jerome Powell.
Economic data from across the globe also pointed to a continued international economic expansion, despite rising numbers of coronavirus cases.
The 10-year Treasury note yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +1.03% rose 8.8 basis points to 0.933%, highest since Nov. 10, while the 30-year bond yield /zigman2/quotes/211347052/realtime BX:TMUBMUSD30Y +0.62% climbed 10.1 basis points to 1.675%. The 2-year note rate /zigman2/quotes/211347045/realtime BX:TMUBMUSD02Y 0.00% edged 2.5 basis points higher to 0.172%.
The spread between the 10-year note and the 2-year, a popular way to track the steepness of the yield curve’s slope, increased to 76 basis points, its widest in three weeks.
U.S. senators offered a $908 billion coronavirus aid proposal on Tuesday as part of efforts to overcome the legislative logjam that has stymied calls for additional fiscal spending.
News of the proposal boosted risk assets while hurting demand for safe-haven investments. The S&P 500 /zigman2/quotes/210599714/realtime SPX -0.30% and Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.09% was trading over 1% higher on Tuesday.
But some analysts remain skeptical on hopes of a near-term breakthrough as similar bills have struggled to get through Congress before.
The eurozone manufacturing purchasing managers index fell to 53.8 in November, from 54.8 in October, but the report also showed factories were optimistic over future demand.
The continued expansion of economic activity has given hope to analysts that the eurozone economy, which has contended with many new COVID-19 restrictions, will avoid a downturn of the scale of the second-quarter this year.
In China , the official manufacturing purchasing managers index last month rose to 52.1 last month, staying in growth territory for the last nine months. Any reading above 50 represents an increase in factory activity
In the U.S., the Institute for Supply Management said its index of manufacturing activity in November fell to 57.5 in November from a 21-month high of 59.3 in the prior month.
“The curve steepening is rational and logical in many different ways. But it’s primarily driven by vaccine hopes,” said Anders Persson, chief investment officer of fixed income at Nuveen, in an interview.
“Treasury prices continue to plunge due to the optimism about a US fiscal stimulus compromise from Congress,” said Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities.