Bonds

10-year Treasury yield rebounds above 1% as White House seeks a possible $1 trillion stimulus

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The benchmark 10-year Treasury yield popped above 1% on news the White House is weighing a fiscal stimulus package of more than $1 trillion to offset the negative economic impact from the coronavirus outbreak.

The yield on the benchmark 10-year Treasury note jumped nearly 30 basis points to 1.038%, its highest level since March 5, as investors bet this stimulus would give a jolt to the economy dealing with a likely recession because of the coronavirus impact. The yield on the 30-year Treasury bond also climbed a similar amount to 1.62%. Bond yields move inversely with prices.

The Trump administration is considering a fiscal stimulus package that could exceed $1 trillion, including direct payments to Americans, according to a source familiar with the matter.

Treasury Secretary Steven Mnuchin said earlier the government is considering directly sending checks to Americans in the next two weeks. "Americans need cash now," he said.

The Federal Reserve also ramped up its effort to help companies having a hard time getting short-term funding. The bank announced a special credit facility to purchase corporate paper from issuers that have been having a difficult time finding buyers on the open market. Corporate paper involves unsecured short-term lending critical to business funding. This follow's the Fed's emergency $700 billion quantitative easing program and a further 100 basis point cut to interest rates on Sunday.

Stocks rebounded as bond prices fell on Tuesday after suffering their worst plunge since the "Black Monday" crash of 1987.

"There will come a stage in the process when the lows are ultimately established and efforts are made to return the market to some semblance of normality," said Ian Lyngen, BMO's head of U.S. rates. "It's unclear if investors have entered this phase yet as the monetary policy reverberations continue to find their way through the system."

Confirmed cases have now surpassed 182,000, with more than 7,000 deaths, according to Johns Hopkins University, as governments around the world have begun to close their borders and enforce lockdowns.

In the U.S., 4,661 cases have now been confirmed with 85 deaths, with New York Mayor Bill de Blasio calling for a "wartime mentality" to contain the outbreak.