U.S. government bond prices fell Wednesday after Republicans released a plan to overhaul the tax code that they hope will pump up economic growth.
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The yield on the benchmark 10-year U.S. Treasury note settled at 2.309%, compared with 2.229% Tuesday -- its biggest one-day gain since March. Yields rise as bond prices fall.
Republican officials unveiled a tax plan on Wednesday that called for lowering the corporate tax rate to 20% from the current 35%, ending state and local tax deductions for individuals and adding incentives for business investment.
Hopes for tax cuts sent U.S. stocks and Treasury yields sharply higher after Election Day last year, although some analysts are skeptical of how much impact Wednesday's announcement will ultimately have on the market, citing ongoing debate among Republican officials over how they will finance the plan.
"I'd be really stunned to see a big move, even if we pass some form of fiscal policy," said Karissa McDonough, fixed-income strategist at People's United Wealth Management.
Congressional leaders are still debating the contours of the plan, including whether revenue from economic growth will pay for tax cuts and if not, whether they would be willing to eliminate popular tax breaks.
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Contentious negotiation in Washington could derail Republicans' efforts to push through the tax overhaul, which could strengthen demand for bonds, Ms. McDonough said. On the other hand, any signs of broader, bipartisan support for the tax overhaul could send yields higher, she added.
Earlier, Treasury prices extended losses after data showed demand for long-lasting U.S. factory goods rose faster than economists expected in August.
Orders for U.S. durable goods increased a seasonally adjusted 1.7% in August from the prior month, the Commerce Department said, more than the 0.9% economists surveyed by The Wall Street Journal had expected.
The report was the latest to show the U.S. economy on solid footing, although some analysts have warned that readings for U.S. growth in the third quarter could be a bit bumpier, following damage from severe hurricanes.
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(END) Dow Jones Newswires
September 27, 2017 16:26 ET (20:26 GMT)