BOND REPORT: Treasury Yields Hold Ground Ahead Of Auction, Fed Speeches, Tax Bill

Treasury yields were little changed on Tuesday as traders watched to see what pushback a House tax bill receives ahead of a key committee vote expected later this week.

What are yields doing?

The 10-year Treasury note yield was barely changed at 2.320% versus a level of 2.318% on late Monday. The 2-year note yield was also little changed at 1.617%. The 30-year bond yield ticked lower to 2.790%, from 2.796%.

Bond prices move in the opposite direction of yields.

What's driving Treasurys?

The tax bill continued to dominate headlines. The House Ways and Means committee is planning to vote on the tax bill by Thursday. Bondholders are worried tax cuts will widen the budget deficit and increase the amount of new issuance hitting the market next year, weighing on prices.

That could weigh on sentiment for $24 billion of 3-year notes at 1 p.m. Eastern. Trading for Treasurys can be influenced by the results of a bond sale.

But analysts say investors will only start to assess the impact of tax bill once they feel the piece of legislation has been fully molded.

What did market participants say?

"Given the difficulties we anticipate with the legislative process, none of these proposals is likely anywhere close to its final form--making it unlikely that rates markets will begin to price potential impacts any time soon," wrote Credit Suisse fixed-income strategists.

"As equities continue to draw funds into their domain, look for bonds to bear the brunt volatility over the next couple of days with the 10yr and 30yr auctions on Wednesday and Thursday," said Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities.

What else is on investors' radar?

What are other assets doing?

Italian and Spanish government bond yields fell as after recent data from the European Central Bank showed the tapering of its bond-buying program wouldn't be as aggressive as earlier thought. Data on Monday showed that once investors included reinvestments of maturing securities. In the 12 months from November, 10.8 billion euros will roll off its balance sheet every month.

The Italian 10-year yield fell 6.5 basis points to 1.715%, while the Spanish 10-year yield fell 4.9 basis points to 1.417%.

(END) Dow Jones Newswires

November 07, 2017 09:46 ET (14:46 GMT)