Benchmark US yields hit multi-week lows

Benchmark US Treasury yields touched their lowest in more than five weeks on Tuesday before reversing course to trade little changed on doubts about the ability of US President Donald Trump to enact fiscal stimulus. Yields on benchmark 10-year notes dropped to 2.314 percent, their lowest since February 24, with analysts saying Trump's failure to achieve passage of a bill to overhaul the US healthcare system last month could portend similar difficulties turning campaign pledges, including tax reform, into successful legislation.
Analysts also cited the looming US Senate showdown over Trump's Supreme Court nominee, Neil Gorsuch, as an additional source of doubt the new administration will be able to achieve its agenda. Yields on seven- and five-year Treasuries also fell to more than five-week lows of 2.123 percent and 1.840 percent, respectively, while three-year yields touched Monday's nearly five-week low of 1.437 percent. Yields on 30- and two-year Treasuries did not breach Monday's lows.
"I do think politics is driving a lot of the uncertainty," said Ellis Phifer, market strategist at Raymond James in Memphis, Tennessee. "You had a pro-growth agenda with a full power, and obviously the power has been split," Phifer said in reference to divisions between moderates and conservatives in the Republican Party despite its control of both the White House and Congress. Analysts said traders reinstated short bets against Treasuries or took profits on long positions once 10-year yields neared a key resistance level of 2.31 percent. That led yields to edge off their lows later in US morning trading to last stand little changed.
Some analysts said the bid for Treasuries was overdone, leading to the selling pressure. "The market is getting ahead of itself," said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York, in reference to the drop in yields. "All you're seeing today is some profit-taking on longs."
US 10-year notes were last down 1/32 in price to yield 2.355 percent, from a yield of 2.350 percent late Monday. US 30-year bonds were last down 7/32 in price to yield 2.995 percent, from a yield of 2.984 percent late Monday. Two-year notes last yielded 1.254 percent, compared with 1.242 percent late Monday.