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U.S. Treasury yields edge up before Biden inauguration

U.S. Treasury yields edged higher on early Wednesday’s trade as investors looked ahead to the inauguration of President Joe Biden.

What are Treasurys doing?

The 10-year Treasury note yield
TMUBMUSD10Y,
1.100%

gained 0.7 basis point to 1.099%, while the 2-year note rate
TMUBMUSD02Y,
0.141%

was up 0.4 basis point to 0.135%. The 30-year bond yield
TMUBMUSD30Y,
1.847%

added 0.8 basis point to 1.847%.

What’s driving Treasurys?

Biden is set to be inaugurated at 12 p.m. ET on Wednesday, calling an end to President Donald Trump’s tenure in the White House. His new administration’s priorities are being closely eyed by bond traders looking to see if his policies could heat up reflationary pressures in the U.S. economy.

See: Biden aims for best stock-market rally in 92 years ahead of inauguration

Yet the earlier bond market selloff this month, sparked by fiscal stimulus fears, has struggled to gain impetus. Markets are now showing signs of consolidating, with the 10-year Treasury yield hanging around 1.10%.

An auction for $24 billion of 20-year bonds could offer some catalyst for trading. Recent long-dated Treasury auctions have seen strong demand from bond buyers who looked to take advantage of the recent yield surge.

In U.S. economic data, the National Association of Home Builders releases its index of housing market activity at 10 a.m. ET.

What did market participants say?

“For the 20 year we expect good demand as the market has settled in after the substantial back-up to start the year,” said Justin Lederer, an interest-rate strategist at Cantor Fitzgerald.

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