CHICAGO: US Treasury yields drifted mostly lower on Wednesday as Treasury Secretary Steve Mnuchin said a deal to combat the economic fallout from the coronavirus pandemic appeared unlikely before the Nov. 3 presidential election.

The benchmark 10-year yield was last down less than a basis point at 0.7223%.

Speaking at the Milken Institute Global Conference, Mnuchin said he and Democratic House Speaker Nancy Pelosi were still "far apart" on some issues and that getting a stimulus deal done before the election would be difficult.

Ben Jeffery, a strategist at BMO Capital Markets in New York, said Mnuchin's remarks sent yields lower.

"That was the main event today," he said, adding that yields so far this week were stuck in a range.

Tom Simons, a money market economist at Jefferies in New York, said aside from virus vaccine news, "stimulus is probably the most important news item that the market is trading on."

"But at this point, it's hard to expect that anything is going to get done this year on that," he said.

Meanwhile, a bigger-than-expected increase in US producer prices in September did not rattle the market. The Labor Department reported the producer price index (PPI) for final demand rose 0.4% last month after advancing 0.3% in August and was up 0.4% in the 12 months through September.

Economists polled by Reuters had forecast the PPI gaining 0.2% in September and rebounding 0.2% on a year-on-year basis.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was last down less than a basis point at 0.139%.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was last at 58 basis points, less than a basis point lower from Tuesday's close.