Monday, January 17

Investors bet the day after omicron with US bonds

The US Treasury yield curve steepened on Tuesday. Investors were focused on optimistic economic conditions despite the rapid spread of the omicron variant of the coronavirus.

What’s going on? The upward movement represents a change in sentiment compared to Monday, when the yield on the benchmark 10-year bond reached a low of 1.35 percent, the lowest since December 3. On Tuesday morning, the return was up 5.1 basis points to 1.47 percent.

Because it is important? Investors appear to be betting that omicron will not stop economic growth, according to Tufts University economist Brian Bethune.

  • The message from Tuesday’s session confirms that “omicron is a threat, but it is not going to derail things,” corroborates Bethune. This vision penetrates the market despite closures in several developed economies.

The context

  • The main US stock indices are trading higher on Tuesday, contributing to risk taking.
  • The bond sales pushed up a closely watched area of ​​the U.S. Treasury yield curve, which measures the difference between the yields of two-year and 10-year bonds, seen as an indicator of economic expectations, which was at 81 basis points.

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