2-year Treasury note yields around 0.75% as Dow industrials extend rally

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By Mark DeCambre

U.S. Treasury yields were mixed Tuesday, with the 2-year maturity at a new 52-week high. Investors remained hopeful that the omicron variant of COVID would have limited economic impact, with that belief helping to lift the Dow industrials while limiting appetite for Treasurys.

What are yields doing?

What’s driving the market?

Yields on the shorter end of the Treasury curve were mostly rising as investors shook off concerns about the economic impact of the omicron variant of the coronavirus and sending the Dow industrials higher.

While COVID spreads around the globe, particularly wreaking havoc on air travel due to rising cases among workers, investors believe the global economy can handle it. The Centers for Disease Control and Prevention has cut its recommended COVID-19 isolation time to five days, from 10, if affected individuals are symptom-free.

Debt investors parsed the S&P Case-Shiller U.S. house price index, which posted a 18.4% year-over-year gain in October, down from 19.1% the previous month. Monthly, the index increased 0.8% between September and October.

Fixed-income investors have been digesting a faster reduction in monthly bond purchases by the Federal Reserve to combat inflation and expectations that policy makers could lift interest rates, which currently stand at a range between 0% and 0.25%, at least three times in 2022.

Meanwhile, an auction of $59 billion in 5-year notes tailed 0.4 basis point and stopped at 1.263%. A stop-through indicates by how much the highest yield the Treasurys sold in the auction is below the highest yield expected when the auction began–the “when issued” level and the “tail” is the gap between the highest yield the Treasury sold in the auction and the yield before the auction began.

-Mark DeCambre

What strategists are saying

 

(END) Dow Jones Newswires

12-28-21 1616ET

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