Treasury Yields Rise Marginally on Omicron, Economic Growth Concerns

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Despite increasing concerns around omicron-related lockdowns and lower growth forecasts by economists, U.S. Treasury yields rose slightly on Tuesday. Notably, a rejection of Biden’s $1.75 trillion spending plan by democratic lawmaker Senator Joe Manchin led to a lowering of U.S. economic growth forecasts.

The yield on 10-year Treasury notes increased by less than a basis point to 1.420%, while 30-year Treasury bond yields moved up marginally to 1.849%.

Supporting Data

In order to constrain the rapid spread of the omicron COVID variant, which currently represents 73% of sequenced cases in the U.S., more European countries are planning restrictions during the Christmas holidays, with U.K. Prime Minister Boris Johnson likely to tighten COVID-19 measures if needed.

U.S. pharmaceutical and biotechnology company Moderna (NASDAQ: MRNA) revealed promising news related to its booster shot, announcing that preliminary data showed substantial protection against the omicron variant.

The Federal Reserve’s hawkish stance on monetary policy was also in focus for investors. Markedly, last week, the Fed revealed its plans to reduce its monthly bond purchases at a faster pace and its intention to start hiking interest rates in 2022.

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