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The 10-year U.S. Treasury yield surpassed 1.77% on Tuesday, as coronavirus vaccine deployments and planned infrastructure spending boosted expectations of a broad economic recovery and a rise in the economy. inflation.
The yield on the benchmark 10-year Treasury bill jumped to 1.76% at 7:23 a.m. ET. It topped 1.7% earlier in the session, the first time around this level in January 2020.
The yield on the 30-year Treasury bill rose to 2.456%. Yields move inversely with prices.
The rise in yields comes a day before President Joe Biden revealed details of his infrastructure plan. The stimulus package will include up to $ 3 trillion in spending across a wide range of sectors in an effort to support the U.S. economy.
HSBC strategists said in a note released Monday that “the stimulus measures and any infrastructure plan are likely to prove to be a sugar rush for the economy given the secular headwinds.”
Meanwhile, the pace of Covid-19 vaccinations in the United States is increasing, with the Centers for Disease Control and Prevention reporting that more than 3 million doses have been administered for three consecutive days, as of Sunday. However, coronavirus cases are also increasing, with more than 63,000 new infections reported daily in the United States, based on a seven-day average of data from Johns Hopkins University.
The rise in yields comes as there is increasing talk of inflation as the US economy begins to rebound. There were already concerns that the $ 1.9 trillion stimulus spending package signed earlier this month could push prices up amid an economic recovery from the pandemic.
Unigestion’s investment director, Olivier Marciot, said in a note Tuesday that he believes there is a “risk that inflationary pressures will be less transitory than expected, increasing the chances that the Fed will stay behind. curve ” and is later forced to change course faster than expected.
Credit Suisse strategists reiterated on Tuesday that they expected the 10-year yield to hit 2% in the second quarter. Meanwhile, an ING strategist recently told CNBC that he believed the 10-year yield would climb “well above” the 2% level.
On the data front, the January S & P / Case-Shiller Home Price Index is expected to be released at 8 a.m. ET on Tuesday.
Federal Reserve Vice Chairman Oversight Randal Quarles is scheduled to deliver a speech on the Financial Stability Board to the Peterson Institute for a discussion on the international economy at 9 a.m. ET.
An auction is scheduled to take place on Tuesday for $ 40 billion in 42-day tickets.
– CNBC’s Nate Rattner contributed to this report.
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