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Treasury Yields Fall as Investors Shrug Off Stimulus

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Investors expect Treasury yields to trade in a relatively tight range in the near term.

Investors expect Treasury yields to trade in a relatively tight range in the near term.

Photo: Anadolu Agency via Getty Images

U.S. government-bond yields fell Tuesday, with investors shrugging off new stimulus measures passed overnight in Congress.

The yield on the benchmark 10-year Treasury note finished Tuesday’s session at 0.917%, according to Tradeweb, down from 0.941% at Monday’s close. The 30-year Treasury bond yield fell to 1.652%, from 1.683% Monday.

Yields, which fall when bond prices rise, were unmoved overnight after lawmakers passed a $900 billion Covid-19 stimulus package. The emergency spending measure, which is expected to be signed into law Tuesday, should help support the U.S. economy through a difficult winter and into the new year, analysts said.

Yields then declined during the early morning session as more nations curtailed travel to contain a fast-spreading variant of the coronavirus. The U.K. has imposed new restrictions on social and business activity, raising concerns about other countries following in its step and pushing some investors into havens such as U.S. Treasurys.

Uncertainty surrounding trade talks between the U.K. and the European Union is also driving some investors into the relative safety of U.S. government bonds, analysts said. The U.K. will leave the EU’s single market and customs union on Jan. 1 unless Prime Minister
Boris Johnson

can strike a deal in the next 9 days.

Many investors expect yields to trade in a relatively tight range in the near term, as immediate challenges are balanced by hopes for a vaccine-fueled economic rebound.

“There’s an element of uncertainty and concern, but we don’t sense any dread regarding next year,” said Jim Vogel, interest rates strategist at FHN Financial.

Actions by the Federal Reserve are expected to limit the moves in yields for years to come. In an effort to keep U.S. borrowing costs low, the central bank cut interest rates to near zero and is buying billions of dollars’ worth of Treasurys, a program that many investors expect to continue until the economy gets back to pre-pandemic levels.

In one positive sign, data from the Commerce Department Tuesday showed the U.S. economy grew slightly stronger than previously estimated during the third quarter, with gross domestic product increasing at an annual rate of 33.4% seasonally and inflation adjusted, versus the last estimate of 33.1%. The positive revision was spurred by higher-than-estimated consumer and business spending.

Still, consumers’ views of the economy have soured in December, according to new data Tuesday from The Conference Board. The research group’s consumer confidence index fell to 88.6 in December, down from 92.9 in November and below the 97.5 level expected by economists surveyed by The Wall Street Journal.

Write to Sebastian Pellejero at sebastian.pellejero@wsj.com