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Bond Report

Oct. 1, 2020, 3:59 p.m. EDT

Treasury yields pull back from session highs on signs that fiscal stimulus talks have hit the rocks

By Sunny Oh

U.S. Treasury yields returned to where they traded at the start of Thursday, falling from session highs after signs that lawmakers were struggling to reach an agreement on a stimulus package.

The 10-year Treasury note yield (XTUP:BX:TMUBMUSD10Y) was at 0.677%, after hitting a high of 0.719%, while the 2-year note (XTUP:BX:TMUBMUSD02Y) was up 0.6 basis point to 0.129%. The 30-year bond yield (XTUP:BX:TMUBMUSD30Y) stood at 1.454%. Bond prices move inversely to yields.

Investors paid attention to negotiations in Congress over a new raft of fiscal spending measures. House Democrats held back on a vote on a stimulus bill to give more time for negotiations with the White House and Republicans, raising hopes that lawmakers could reach a deal before the end of the year.

But on Thursday, House Speaker Nancy Pelosi cast doubt on the prospect of an agreement. And White House Press Secretary Kayleigh McEnany  said Pelosi’s approach to negotiations was not “serious.”

See : Coronavirus-aid talks entering final stages as Pelosi, Mnuchin meet in Washington

Meanwhile, data early Thursday showed U.S. initial jobless benefit claims fell to 837,000 in mid-September from 873,000, while continuing claims dropped 980,000 to 11.8 million.

Americans ratcheted up their spending in August for the fourth month in a row in a good sign for the economy, but the increase was the smallest since the U.S. reopened and pointed to a slower recovery.

The Institute for Supply Management said its manufacturing index fell to 54.6 in September from a 21-month high of 56 in the prior month. Any number above 50 marks growth in economic activity.

“Concern around the path of stimulus is extremely important. We’re at a point where the economic uncertainty brought on by the pandemic is still very high and we don’t know when it will diminish,” said Greg Wilensky, head of U.S. fixed income for Janus Henderson Investors, in an interview. 

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