10-Year Treasury Yield Ends Session Flat After Hitting a Near 10-Month High

The 10-year Treasury yield pared an advance earlier and finished Tuesday's session flat after an auction was met with strong demand.

The yield on the benchmark 10-year Treasury note closed little changed at 1.13% after rising to 1.18%, its highest level since March 20. The yield on the 30-year Treasury bond was also flat at 1.88%. The long-maturity rate earlier climbed to 1.904%, a level last since in March. Yields move inversely to prices.

Treasury yields moved off highs after the auction of $38 billion in 10-year notes on Tuesday. The auction cleared at a yield of 1.164%, compared to a six reopening average of 0.781%, as investors bought the government bonds at the highest yields in months amid inflation risks. Non dealers bid 80%, versus a 73.6% average.

Rates have been moving higher, with the 10-year yield breaching the 1% mark last week, on hopes for additional stimulus. President-elect Joe Biden said further economic stimulus would be "in the trillions of dollars." More details will follow in a formal announcement on Thursday.

Atlanta Federal Reserve President Raphael Bostic said Monday interest rates could rise sooner than forecast as the economy recovers more quickly than expected from the throes of the Covid-19 damage. Bostic said rate increases could begin by mid-2022 or early 2023.

"There is a building concern that the vaccine and reflationary optimism has allowed the Fed to begin the conversation regarding tapering QE purchases sooner than might otherwise have been the case," Ian Lyngen, BMO's head of U.S. rates, said in a note on Tuesday. "For the time being, the takeaway appears to be a market content to discount the potential implications as simply too far off on the horizon."

House Democrats introduced an article of impeachment against incumbent U.S. President Donald Trump for inciting a mob of his supporters who invaded the U.S. Capitol last week.