By Karen Brettell
NEW YORK, Nov 20 (.) – The return of 10-year U.S. Treasuries rebounded from 11-day lows on Friday as the government’s request for the Federal Reserve to return unspent funds was seen as programs designed to support markets would not alter the conditions.
* Optimism that the US government will accept new stimulus also helped boost yields.
* In a letter to the Fed chief, Treasury Secretary Steven Mnuchin said the $ 455 billion earmarked, most of it for the Fed to help businesses, nonprofits, and local governments, should be made available to the Congress to be reused.
* The 10-year yield fell to 0.818% before rebounding to stabilize at 0.847%, virtually unchanged on the day.
* “I think the market reaction this morning has been quite mature,” said Padhraic Garvey, regional director of research for the Americas at ING. “It can be a problem if we have volatility going forward, but it is not catastrophic in the here and now.”
* Yields rose after Mnuchin defended his decision on Friday, saying that Congress should use the money to help American small businesses through grants.
* The timing of Mnuchin’s application raised some concerns that the financing market could be more vulnerable to a reduction in liquidity during the crucial year-end period, when many participants reduce their loans.
* Benchmark 10-year yields are below an eight-month high of 0.975% touched last week amid optimism about vaccines. (Edited in Spanish by Javier Leira)