Bonds

10-year, 30-year Treasury yields hit 4-month high as traders monitor stimulus talks

Treasury yields extended their move higher on Wednesday as investors remained focused on the progress for a fresh round of fiscal stimulus.

The yield on the benchmark 10-year Treasury note hit a four-month high of 0.836% after closing above 0.8% for the first time since June in the previous session. The rate, which moves inversely to prices, last traded around 0.804%.

The yield on the 30-year Treasury bond rose to 1.653%, its highest level since June 9. The rate last traded at 1.606%. The long-maturity yield has broken out of its 200-day moving average, a widely watched momentum indicator.

Treasurys

"The level we're watching is the 0.90% level," Matt Maley chief market strategist at Miller Tabak, said in a note. "A significant move above that level would take the 10-year yield above its trend-line from late 2018 ... even though a 10-yr yield at or very near 1% on the U.S. 10-year note would be extremely low on an historical basis, it would still signal an important change in trend."

The advance in yields came amid optimism toward a stimulus agreement in Washington. House Speaker Nancy Pelosi said in a MSNBC interview around midday that she hopes to resolve "appropriations piece" of the coronavirus aid bill later on Wednesday.

White House Chief of Staff Mark Meadows said Tuesday evening that Treasury Secretary Steven Mnuchin and Pelosi had made "good progress" toward a deal after their Tuesday talk, although Meadows warned the two sides "still have a ways to go."

President Donald Trump has said he is willing to accept a large relief package despite opposition from within his own Republican party.

"A 1% [10-year] yield is possible soon if a fiscal deal gets passed," Peter Boockvar, chief investment officer at Bleakley Advisory Group, said in a note on Wednesday.

The benchmark 10-year rate has bounced from its all-time low hit in the depth of the pandemic. The rate reached a record low of 0.318% on March 8 amid a historic flight to bonds.

Auctions will be held Wednesday for $25 billion of 105-day Treasury bills and $30 billion of 154-day bills, along with $22 billion of 20-year bonds.