Treasury Market’s Grip on 1% Yields at Risk of Slipping Away

(Bloomberg) -- The 10-year Treasury note’s almost three-week run above the once-elusive 1% yield is suddenly looking precarious.

The benchmark rate sank as low as 1.0295% on Monday, down 5.6 basis points amid a flurry of block trades of related futures contracts.

Traders focused on the possibility that a U.S. fiscal-relief package might be delayed, undercutting a key reason why the 10-year rate surpassed 1% on Jan. 6 for the first time since March. The preference for bonds, which lowered yields, continued even as stocks recovered from Monday morning losses. Declines in yields weren’t just limited to the U.S. as investors also scooped up U.K., Italian and German bonds, factoring in prospects for tougher coronavirus lockdowns.

“The 10-year U.S. yield has already had a meaningful breach of a 1.07% resistance level on Monday, clearing the way for an attempt at 1%,” said BMO Capital Markets strategist Benjamin Jeffery. He said the only other technical level to watch was the Jan. 6 close at 1.036%, which the rate broke through.

Monday’s low was a level last seen on Jan. 7.

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