NEW YORK: Benchmark US Treasury yields touched their lowest in more than five weeks on Tuesday before edging higher to trade little changed on doubts about the ability of US President Donald Trump to win enactment of fiscal stimulus.
Yields on benchmark 10-year notes dropped to 2.314 percent, their lowest since Feb. 24, with analysts saying that Trump's failure to achieve passage of a bill to overhaul the US healthcare system last month could portend similar difficulties turning campaign pledges, including tax reform, into successful legislation.
Yields on seven- and five-year Treasuries also fell to more than five-week lows of 2.123 percent and 1.840 percent, respectively, while three-year yields touched Monday's nearly five-week low of 1.437 percent. Yields on 30- and two-year Treasuries did not breach Monday's lows.
Analysts said traders reinstated short bets against Treasuries or took profits on long positions once 10-year yields neared a key resistance level of 2.31 percent. That led yields to edge off their lows later in US morning trading to last stand only slightly lower on the day.
"People are starting to lose a little bit of faith in Trump's agenda," said Justin Hoogendoorn, head of fixed income strategy at Piper Jaffray in Chicago.
Analysts additionally cited the challenges facing Trump's Supreme Court nominee, Neil Gorsuch, as an additional source of doubt that the new administration will be able to achieve its agenda.
Democratic Senator Chris Coons on Monday announced opposition to the nominee, ensuring Democrats can block a US Senate confirmation vote to give Gorsuch a seat on the high court.
Yields also edged off their lows, however, as some traders considered the bid for Treasuries overdone.
"The market is getting ahead of itself," said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York, in reference to the drop in yields. "All you're seeing today is some profit-taking on longs."
US 10-year notes were last up just 3/32 in price to yield 2.337 percent, from a yield of 2.350 percent late Monday.
US 30-year bonds were last up 6/32 in price to yield 2.973 percent, from a yield of 2.984 percent late Monday. Two-year notes last yielded 1.246 percent, compared with 1.242 percent late Monday.
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