U.S. Treasury yields little change as COVID 19 infections rise

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U.S. Treasury yields little change as COVID 19 infections rise

Karen Brettell NEW YORK, Nov 15, Reuters -- Treasury yields were little changed on Monday as investors weighed concerns about the growth of COVID 19 infections against new Treasury supply and the possible effects of the Federal Reserve reducing its bond purchases. Austria imposed a lockdown on people who were notvaccinated against the coronaviruses on Monday as winter approaches and infections increase across Europe. Any new U.S. shutdowns are likely to negatively affect economic growth and increase demand for safe-haven U.S. debt. At the same time, corporate issuance is expected to increase as companies rush to sell debt before the holiday season, a factor that is likely to push yields higher. The Treasury sold $23 billion in new 20 year bonds this week after seeing very weak demand for a $25 billion auction of 30 year bonds last week. The Fed is beginning to reduce the size of its bond purchase program, which analysts expect will push yields higher. Tom di Galoma, a managing director at Seaport Global Holdings in New York, said that we are kind of caught between the higher infection rate and supply and the effects of the taper. The one-month low of 1.42% was last Tuesday at 1.60%, and is up from a one-month low of 1.62% last Tuesday. The tenor continues to suffer from a relatively low demand, so bond yields were above those offered on 30 year bonds. The bond yields for the twenty-year period were last at 2.00% while the bond yields for the 30 year period were at 1.98%. The Treasury said earlier this month that it would cut issuance of seven-year and 20-year maturities at a faster pace than other issues in the coming quarter to address structural imbalances in supply and demand at these tenors. The Treasury Inflation-Protected Securities TIPS will be sold on Thursday by the U.S. government. The data showed that the U.S. consumer prices posted their biggest gain in 31 years in October, but the benchmark notes remain below five-month peaks reached in mid-October. Retail sales data will be the next major U.S. economic release on Tuesday. Several Fed officials are due to speak this week, and will be watching to see if they express concerns that rising price pressures are getting more and more expensive. The speakers include Richmond Fed President Thomas Barkin, Atlanta Fed President Raphael Bostic, San Francisco Fed President Mary Daly, New York Fed President John Williams and Chicago Fed President Charles Evans.