The 10-year yield of the US Treasury remained above the 1.1% mark on Monday morning, after President-elect Joe Biden promised on Friday an additional economic stimulus that will be “in billions of dollars”.
The yield on the 10-year Treasury benchmark rose to 1.103% at 7:12 a.m. ET, while the yield on the 30-year Treasury bond rose to 1.856%. Yields move in the opposite direction to prices.
Treasury yields barely moved on Monday as traders waited for more details on Biden’s stimulus plan, which will follow in an official announcement on Thursday, six days before it is taken over.
The need for additional incentives was highlighted by data on jobs in the US in December, which came out on Friday. It showed that non-farm wages fell by 140,000 last month, up from an expected increase of 50,000.
“The loss of momentum in the labor market is clear and those who have previously worked in retail, restaurants, entertainment, leisure and hospitality, as well as public sector workers in state and local governments, have paid the price,” wrote Joe Brusuelas. chief economist at RSM.
“The major political implication of the employment report is quite clear: the next round of fiscal aid must address the hole in state and local budgets, which was opened by the loss of revenue, which led to the loss of 1.31 million jobs last year, ”Brusuelas added.
However, Tom Essaye, the 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 greater sustainable movement of inflation, then the talks on reducing the rate of reduction [quantitative easing] it could appear much earlier than the markets think, “Essaye said.
Raphael Bostic, president of the Federal Reserve Bank of Atlanta, will give a speech on Monday at 12 ET.
– CNBC’s Yun Li contributed to this report.