Treasury yields fall as traders weigh U.S. coronavirus stimulus prospects

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Treasury yields slipped on Tuesday as traders digest the latest news surrounding a potential U.S. fiscal stimulus package along with muted inflation growth.

The 10-year Treasury yield fell by more than 3 basis points to 0.735%. The 30-year bond rate slid to 1.524%. The 2-year yield also pulled back to 0.137%. Yields move inversely to prices.

House Speaker Nancy Pelosi, D-Calif., said in a letter to colleagues that the proposition from the Trump administration has insufficient offers on healthcare issues. Over the weekend, the administration called on Congress to pass a smaller $1.8 billion coronavirus relief bill as negotiations on a bigger package continue to run into roadblocks.

Yields had been rising recently along with equity prices amid hope that Democrats and Republicans can reach a deal on coronavirus aid before the Nov. 3 election.

On the economic data front, consumer prices rose 0.2% last month, matching expectations. However, that print represents a growth slowdown from August.

“After several months of above-trend gains, price pressures are finally normalizing,” Aneta Markowska, chief economist at Jefferies, said in a note. “It is difficult to find any areas of strength in the September CPI data outside of used car pricing, which is unlikely to be sustained. The weakness in the sticky components is particularly worrisome and points to continued disinflation ahead.”

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