U.S. government debt yields attempt to climb above 2.60% ahead of Brexit vote


Treasury yields rose Wednesday as investors await the results of a vote on a no-deal Brexit arrangement, and an auction for long-dated government paper in the afternoon.

The 10-year Treasury note yield

TMUBMUSD10Y, +0.69%

rose 1.6 basis points to 2.621%, while the 2-year note yield

TMUBMUSD02Y, +0.66%

picked up 1.2 basis points to 2.465%. The 30-year bond yield

TMUBMUSD30Y, +0.76%

gained 2.2 basis points to 3.012%. Bond prices move inversely to yields.

British lawmakers are set to vote at 3 p.m. Eastern time on whether the U.K. leaves the European Union without an exit deal in hand in 16 days, after Parliament on Tuesday rejected Prime Minister Theresa May’s withdrawal agreement for a second time in the past few months. If lawmakers vote against a no-deal outcome, often described as a no-deal Brexit, as is expected, Parliament will vote Thursday to delay the U.K.’s exit from the EU by extending Article 50, the legal process by which Britain triggered its departure from the Europe’s trade bloc.

“The market’s base case is clearly for today’s Brexit vote to reject a no-deal scenario and instead pivot toward a delay, an outcome which we’d presume is largely priced in already. If, instead, a hard Brexit were to win parliamentary support, then we’ll look for another flight-to-quality rally in safe haven assets,” wrote Jon Hill, an interest-rate strategist at BMO Capital Markets.

See: Why this week’s Brexit chaos is good for the City

Read: ‘A waste of two years’ — City reacts to crushing defeat of May’s Brexit deal

Investors will brace for a sale of $16 billion of 30-year bonds at 1 p.m. So far, this week’s round of debt sales have been well received by investors who have shown interest in buying bonds as the Federal Reserve stays on hold. Higher interest rates can weigh on prices for government paper, as the higher yields of newly sold debt will result in discounts on existing issuance.

In economic data, durable goods numbers for January are set for release at 8:30 a.m., along with February’s producer-price index. Soon after, January’s construction spending data will be released at 10 a.m.

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Source : MTV