Treasury yields rise with the Fed’s faster taper plans, omicron variant in focus

Treasury yields rise with the Fed’s faster taper plans, omicron variant in focus

U.S. Treasury yields rose on Wednesday morning, amid investor concerns around the omicron variant and the Federal Reserve’s plans to potentially taper faster than expected.

The yield on the benchmark 10-year Treasury note climbed 6 basis points to 1.5005% at 4:15 a.m. ET. The yield on the 30-year Treasury bond added 5 basis points to 1.8362%. Yields move inversely to prices and 1 basis point is equal to 0.01%.

Investors continue to watch for developments on the new omicron Covid-19 variant, with uncertainty around its rate of transmissibility and fears that it could evade vaccines.

Meanwhile, monetary policy has also been in focus for investors. Fed Chairman Jerome Powell indicated in a testimony in front of Congress on Tuesday that the central bank may quicken the pace of its asset tapering schedule.

Powell said that he thought the Fed could pull back its bond-buying program faster than the $15 billion-a-month schedule announced in November.

Bob Parker, an investment committee member at Quilvest Wealth Management, told CNBC’s “Squawk Box Europe” on Wednesday that he believed that the Fed’s potential plans to now finish tapering by March or April was “justified.”

Parker pointed to the rebound in economic growth and inflation, and said that it was “fairly clear that inflation as we go into the first quarter of next year is probably going to stay at current levels.”

He said that the Fed was, therefore, trying to control inflation so it wouldn’t remain at the current levels this time next year.

Powell is scheduled to speak in front of the U.S. House Committee on Financial Services at 10 a.m. ET on Wednesday.

On Wednesday, payroll services firm ADP is due to release its November employment change report at 8:15 a.m. ET. Economists polled by Dow Jones expected 506,000 private jobs were added in November, down from October’s 571,000.

Markit’s final manufacturing purchasing managers’ index reading for November is due out at 9:45 a.m. ET. ISM’s manufacturing PMI is then due out at 10 a.m. ET.

Auctions are due to be held on Wednesday for $40 billion of 119-day bills and $40 billion of eight-day bills.

— Maggie Fitzgerald contributed to this market report.

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