U.S. Treasury yields rose Wednesday as more bond traders grew confident that the coronavirus vaccination rollout and further fiscal aid from Congress would sustain the economic recovery in 2021.
What are Treasurys doing?
The 10-year Treasury note yield
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What’s driving Treasurys?
Investors have been piling on wagers that the vaccine rollout and ample fiscal aid would spur the recovery. The rise in inflation expectations would, in turn, take a toll on the value of longer-dated government paper, pushing their yields higher and steepening the yield curve.
Read: U.S. Treasury market reloads bets on reflation
Meanwhile, U.S. coronavirus case numbers have been declining. The U.S. averaged 141,437 new cases a day in the past week, down 30% from the average two weeks ago. Hospitalizations have also been falling, according to the COVID Tracking Project. There were 92,880 COVID-19 patients in U.S. hospitals on Tuesday, down from 93,536 a day earlier and the lowest level since Nov. 28.
In U.S. economic data Automatic Data Processing Inc. said private-sector employment rebounded 174,000 in January, after falling 78,000 in December.
The Institute for Supply Management’s gauge of the service sector activity rose to a two-year high of 58.7% from a revised 57.7% in the prior month. The positive data from both the labor market and the services sector, which takes up the lion’s share of U.S. industry, helped add fuel to the reflation trade.
The Treasury Department announced it would sell $126 billion in notes and bonds next week as part of its quarterly refunding. That’s up from $122 billion last quarter.
What did market participants say?
“The main driver of the price action seems to be better than expected economic data and some of that data is showing price pressures,” said Patrick Leary, chief market strategist at Incapital, in e-mailed comments.
