Treasuries showed a notable move to the downside during trading on Monday, giving back ground after trending higher over the past few sessions.
Bond prices moved steadily lower as the day progressed, settling firmly in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, advanced 8.9 basis points to 1.625 percent.
The pullback by treasuries came after President Joe Biden announced his intent to nominate Jerome Powell for a second term as Federal Reserve Chair.
The White House also revealed that Biden intends to nominate current Fed Governor Lael Brainard as Vice Chair of the Federal Reserve System.
“While there’s still more to be done, we’ve made remarkable progress over the last 10 months in getting Americans back to work and getting our economy moving again,” Biden said.
He added, “That success is a testament to the economic agenda I’ve pursued and to the decisive action that the Federal Reserve has taken under Chair Powell and Dr. Brainard to help steer us through the worst downturn in modern American history and put us on the path to recovery.”
Biden expressed confidence Powell and Brainard’s focus on keeping inflation low, prices stable, and delivering full employment will make the economy stronger than ever before.
“Fundamentally, if we want to continue to build on the economic success of this year we need stability and independence at the Federal Reserve – and I have full confidence after their trial by fire over the last 20 months that Chair Powell and Dr. Brainard will provide the strong leadership our country needs,” Biden said.
Powell, who was nominated by former President Donald Trump, took office as Fed Chair in February 2018. His current term was due to end in February 2022.
While the re-nomination of Powell will give the Fed stability as it grapples with the economic recovery and elevated inflation, Brainard was seen as the more dovish choice.
Treasuries saw further downside after the Treasury Department revealed this month’s auctions of $58 billion worth of two-year notes and $59 billion worth of five-year notes attracted below average demand.
A quiet day on the U.S. economic front may lead to light trading on Tuesday ahead of the release of a slew of data on Wednesday.
Bond traders are still likely to keep an eye on the results of the Treasury Department’s auction of $59 billion worth of seven-year notes.
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