U.S. government bonds were little changed Tuesday as the market took a break from its recent selloff.
In recent trading, the yield on the benchmark 10-year Treasury note was 2.330%, according to Tradeweb, compared with 2.337% Monday.
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Yields, which fall when bond prices rise, ticked higher overnight but eased lower at the start of the U.S. trading session.
Yields have trended higher in recent weeks due to a variety of factors, among them improved odds for tax cuts out of Washington and speculation that Federal Reserve Chairwoman Janet Yellen could be replaced next year with someone more inclined to raise interest rates.
After drawing relatively little attention from investors for months, the prospect of a tax-cut package has come back into focus following the release of a Republican plan last week and movement in Congress to pass a budget blueprint that would allow Republicans to cut up to $1.5 trillion in taxes over the next decade without votes from Democrats.
A large tax cut for individuals and corporations could weigh on Treasurys in part by boosting economic growth, which could lead investors to favor riskier assets, as well as inflation, which chips away at the fixed returns of government debt. Tax cuts would also expand the budget deficit, forcing the government to sell more bonds to investors at a time when the Fed is also starting to scale back its purchases of Treasurys.
"A lot of moving parts" have led investors to sell bonds recently, said Stanley Sun, interest-rates strategist at Nomura Securities International in New York.
While inflation remains low, that "has stopped being news," leaving investors to focus on other matters like tax policy and candidates to replace Ms. Yellen, he added.
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(END) Dow Jones Newswires
October 03, 2017 11:08 ET (15:08 GMT)