The United States Treasury’s 10-year yield remained above the 1.1% mark on Monday morning, after President-elect Joe Biden promised more economic stimulus that would be “in the trillions of dollars”.
The yield on the 10-year reference Treasury bill rose to 1.103% at 7:12 am ET, while the yield on 30-year Treasury bills rose to 1.856%. Yields move inversely to prices.
Treasury yields barely moved on Monday as investors awaited more details about Biden’s stimulus plan, which will follow in a formal announcement on Thursday, six days before he takes office.
The need for more stimulus was highlighted by US employment data in December, released on Friday. He showed that the non-farm payroll fell by 140,000 last month, against an expected increase of 50,000.
“The loss of momentum in the job market is clear, and those who previously worked in retail, restaurants, entertainment, leisure and hospitality, as well as public sector officials in state and local governments, paid the price,” wrote Joe Brusuelas, economist Head of RSM.
“The main political implication of the jobs report is very clear: the next round of fiscal aid needs to address the hole in state and local budgets that was blown up by the loss of revenue, which resulted in the loss of 1.31 million jobs last year,” stated. Brusuelas added.
However, Tom Essaye, founder of The Sevens Report, noted that “with all this current and expected stimulus, the risks of a disorderly acceleration in bond yields and inflation are rising”.
“If this is the beginning of a sustainable movement of rising inflation, then discussions about a gradual reduction [quantitative easing] it can occur much earlier than markets think, “said Essaye.
Raphael Bostic, president of the Federal Reserve Bank of Atlanta, is due to deliver a speech at 12 noon Eastern time on Monday.
– CNBC’s Yun Li contributed to this report.