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By Kate Duguid
NEW YORK, Sept 28 (Reuters) - U.S. Treasury yields were
roughly flat toward the end of a quiet Monday, with no
significant data releases or Treasury issuance on the calendar,
and investors holding off from making significant moves ahead of
Tuesday's presidential debate.
The benchmark 10-year yield was up 0.2 basis
point on the day at 0.661%, with the 30-year yield
last up 1.6 basis points at 1.421%. The two-year yield
was unchanged on the day at 0.131%.
"Today the price action is modest, which is what you would
expect. There is a very quiet data calendar and no supply to
speak of. To me, the most important risk for markets in the next
five-six weeks is the presidential election, followed closely by
a second wave of COVID," said Jon Hill, U.S. rates strategist at
BMO Capital Markets.
The first debate between the two candidates for the U.S.
presidency – incumbent Republican Donald Trump and former Vice
President Joe Biden, a Democrat – is scheduled for Tuesday
evening.
With five weeks to go until the Nov. 3 general election, the
stakes are high. Trump has recently refused to commit to a
peaceful transfer of power if he loses the election to Biden,
and has said he expects the Supreme Court will have to declare a
winner.
"For better or worse, Treasuries are priced for a pretty
quiet few weeks. There is a little bit of election uncertainty
priced into this market, but I think the reality is, because of
all the uncertainties around the vote and the possibility of a
difficult transition, it has really kept a lot of people highly
focused on the topic, but not necessarily with high
convictions," said Hill.
A slew of investment-grade corporate bond deals came to
market on Monday, which may also have contributed to slower
demand for U.S. government debt. Just under $4 billion in new
high-grade corporate paper had been priced by mid-afternoon
Monday, with a three-part $2 billion deal from Pernod Ricard
still expected to come.
"Positioning on credit may have a little bit of influence on
rates. We’ve got a decent amount of new issue credit deals this
week ahead of the start of earnings season. Positioning ahead of
the credit supply probably is having an influence in the rates
market as well" said Guy LeBas, chief fixed income strategist at
Janney Montgomery Scott.
(Reporting by Kate Duguid; editing by Jonathan Oatis and David
Gregorio)
