WASHINGTON (dpa-AFX) - After ending last Friday's trading modestly higher, treasuries showed a more substantial move to the upside during trading on Monday.
Bond prices soared early in the session and saw continued strength throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, plunged 14.5 basis points to 4.265 percent.
The rally by treasuries came following news President-elect Donald Trump intends to nominate billionaire hedge fund manager Scott Bessent as Treasury Secretary.
Bessent is an advocate for deficit reduction and has also called for Trump's planned tariff increases to be implemented gradually, which could reduce the impact on inflation.
'Hedge fund manager Scott Bessent is perceived as being a relatively conventional and safe pair of hands candidate,' said AJ Bell investment director Russ Mould. 'Importantly, Bessent is seen as being less aggressive on tariffs than some of the rhetoric espoused by Trump on the campaign trail.'
He added, 'A fall in bond yields in response to his unveiling suggests some of the concern about a new wave of inflationary pressures from import tariffs has eased and that Bessent might be able to do something to bring the U.S. deficit under control.'
Treasuries saw further upside after the Treasury Department revealed this month's auction of $69 billion worth of two-year notes attracted above average demand.
The two-year note auction drew a high yield of 4.274 percent and a bid-to-cover ratio of 2.77, while the ten previous two-year note auctions drew a high yield of 2.61.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Trading on Tuesday may be impacted by reaction to reports on new home sales and consumer confidence as well as the minutes of the latest Federal Reserve meeting.
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