10-year Treasury yield approaches 2.40%, a key psychological level
Treasury prices fell, pushing up yields Monday after the Senate over the weekend passed its version of tax legislation, stoking growth and inflation expectations.
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What are Treasury yields doing?
The two-year note yield added 3.2 basis points to 1.810%, the largest single-day climb since Oct. 25. Yields for the short-dated maturity have collected a string of decade-long highs during its unrelenting climb.
The 10-year Treasury yield rose 1.6 basis points to 2.379%, while the 30-year bond yield ticked up 0.8 basis points to 2.771%.
Bond prices move in the opposite direction of yields.
What's driving markets?
The Senate passed its version of the tax overhaul early Saturday after Republicans rushed to make a series of 11th-hour changes to the legislation. A deficit-widening tax bill will push the Treasury Department to increase the size of its debt auctions, which could be bearish for government paper. And as a short-term boost to growth, higher inflationary expectations could lift long-dated yields, which have been stuck in a tight range between 2.60% and 2.00% this year.
A House-Senate conference committee will work to iron out differences between the legislation passed by each chamber. A final bill must then be approved by both the House and Senate for it to end up on President Donald Trump's desk.
What did market participants say?
"This is a big step forward in passing the largest overhaul of the tax system in three decades, which will give the economy a moderate lift," said Sal Guatieri, senior economist for BMO Capital Markets. "The odds of passage -- likely early next year though possibly sooner -- are now clearly better than even."
What else is on investors' radar?
Factory orders fell 0.1% in October. Economists polled by MarketWatch had forecast a 0.4% decline, from a 1.4% climb in September.
See: U.S. factory orders fall slightly in October but still look good (http://www.marketwatch.com/story/us-factory-orders-fall-slightly-in-october-but-still-look-good-2017-12-04)
With the government spending plan set to expire on Friday, Congress will need to pass a short-term spending bill by the end of the week. House Republicans are said to be suggesting a two-week "continuing resolution" to keep the federal government open until Dec. 22.
What did other assets do?
European bond yields followed Treasury yields higher. The German 10-year government bond yield rose 2.8 basis points to 0.342%. The French 10-year government bond yield added 3.7 basis points to 0.648%.
(END) Dow Jones Newswires
December 04, 2017 16:16 ET (21:16 GMT)