Bond Report: Treasury yields tick higher after Moderna announces positive vaccine news

This post was originally published on this site

U.S. Treasury yields rose slightly Monday as Moderna Inc. announced its COVID-19 vaccine candidate was 94.5% effective, bolstering the appeal of risky assets and leading investors to shun safe-haven assets like government bonds. Bond yields, however, finished off their highest levels of the day amid news of a resurgence of the epidemic that was encouraging fresh lockdown protocols in the U.S. and elsewhere the world.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, 0.904% rose 1.4 basis points to 0.906%, while the 2-year note rate TMUBMUSD02Y, 0.189% edged 0.2 basis point higher to 0.179%. The 30-year bond yield TMUBMUSD30Y, 1.664% added 1.2 basis points to 1.659%. Yields and debt prices move in opposite directions.

What’s driving Treasurys?

Bond yields rose and stocks climbed after Moderna MRNA, +9.57% said that its coronavirus vaccine candidate was highly effective based on an early analysis of its late-stage Phase 3 trial results.

See: Moderna shares soar premarket after COVID-19 vaccine candidate achieves 94.5% efficacy in Phase 3 trial

This comes after Pfizer PFE, -3.34% and BioNTech BNTX, -13.66% a week ago announced that their vaccine candidate, was more than 90% effective at preventing COVID-19.

Meanwhile, an adviser to President-elect Joe Biden said a national lockdown would be a “measure of last resort” as municipal and local governments implemented new restrictions on social and business activity over the weekend. Biden himself during a Monday speech said “we are going into a very dark winter,” while emphasizing the need for infrastructure spending that creates jobs, as well as for Congress to come together and provide additional, urgent funding for states, cities and front-line workers during the pandemic.

On the economic front, a gauge of industrial activity in New York state this month fell to 6.3, from 10.5 in October.

A senior Federal Reserve official commented on bond market trading on Monday. Fed Vice Chairman Richard Clarida said he wasn’t worried by the recent run-up in the 10-year Treasury yield, and struck an optimistic note over the U.S. economy’s momentum heading into the fourth-quarter.

What did market participants say?

“The initial spike in longer dated Treasuries yields proved unsustainable, although the bid for domestic equities simply reinforced the bull market in stocks despite all the potential headwinds created by the spike in Covid-19 cases,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets.

Add Comment