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2020.10.2119:21:00UTC+00Treasuries Move Modestly Lower, Extending Recent Downward Trend

Treasuries moved modestly lower during trading on Wednesday, extending the downward trend seen over the past several sessions.

Bond prices regained some ground after an initial move to the downside but remained in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 1.9 basis points to 0.816 percent.

The ten-year yield closed higher for the fifth consecutive session, ending the day at its highest closing level in over a month.

The continued weakness among treasuries came as traders remain optimistic lawmakers will reach an agreement on a new stimulus bill.

White House chief of staff Mark Meadows told CNBC on Tuesday that House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have made "good progress" in talks but noted they "still have a ways to go" before an agreement is reached.

Pelosi and Mnuchin are expected to talk again today as they seek to reach an agreement on a new relief package before next month's elections.

In a post on Twitter, Pelosi's deputy chief of staff Drew Hammill said the Speaker and the Secretary have called for committee chairs to work to resolve differences about funding levels and language.

"With this guidance, the two principals will continue their discussions tomorrow afternoon upon the Secretary's return," Hammill tweeted.

However, Senate Majority Leader Mitch McConnell revealed on Tuesday that he has warned the White House not to make a deal with Pelosi before the elections.

Federal Reserve Governor Lael Brainard urged Congress to pass a new relief bill in a speech at an online conference hosted by the Society of Professional Economists.

"The recovery remains highly uncertain and highly uneven - with certain sectors and groups experiencing substantial hardship. These disparities risk holding back the recovery," Brainard said.

She added, "Further targeted fiscal support will be needed alongside accommodative monetary policy to turn this K-shaped recovery into a broad-based and inclusive recovery."

Economic activity continued to increase across all Federal Reserve districts, according to the central bank's Beige Book report released on Wednesday.

The Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, noted the pace of economic growth characterized as slight to modest in most districts.

Trading on Thursday may be impacted by reaction to reports on weekly jobless claims, existing home sales and leading economic indicators.

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