16.11.201722:05:00UTC+00U.S. Yields Rally after House Approves Tax Bill

U.S. government bonds retreated on Thursday, driving up yields as stocks regained footing after the House passed its version of the bill to revamp the tax code, putting the Republicans one move closer to the tax cut they want to be implemented.

Yield on the 10-year Treasury note advanced 2.7 basis points to 2.361 percent. Meanwhile, the 30-year Treasury bond rose 2.3 basis points to 2.804 percent.

The two-year Treasury note yield rose by 2.5 basis points to 1.712 percent, hitting another new 10-year high.

Yields rallied amid a stronger tone in stock markets, with U.S. stocks reversing all their losses a day after Dow Jones Industrial Average saw a 138 points. The overall weakness in global stocks has stoked the appetite for safe-haven assets such as government bonds, but that flight-to-safety movement was reversed Thursday. The jump in equities gained impetus after passage of the House's tax overhaul.

However, there is concern among bondholders that if the tax cuts are pushed through without countermeasures in the bill, the resulting budget deficits will increase bond issuance and drive yields higher.

Meanwhile, the yield curve also moderately steepened on Thursday, but it has been flattening for weeks, with yields of short bonds rising as traders increasingly bet on a Federal Reserve interest rate hike.