U.S. Treasury prices fell Wednesday, pushing the yield on the 10-year note further above the 1.20% level after touching a five-month low earlier this week.

What are yields doing?

The yield on the 10-year Treasury note BX:TMUBMUSD10Y was up 2.8 basis points at 2.34%. Yields and debt prices move in opposite directions.

The 2-year Treasury note yield

edged up 0.8 basis point 0.202%.

The yield on the 30-year Treasury bond

rose 3.8 basis points to 1.902%.

What’s driving the market?

The Treasury rally has paused after the 10-year yield sank below 1.15% earlier this week as worries over the delta variant of the coronavirus that causes COVID-19 sparked a flight to government bonds.

Equity markets bounced back sharply on Tuesday and U.S. stock-index futures pointed to further gains on Wednesday. Analysts said worries about the delta variant and its effect on the global economy may have been overdone, possibly having caused yields to overshoot to the downside.

The Treasury will auction $24 billion in 20-year bonds later Wednesday.

What are analysts saying?

The 20-year reopening auction may have added to late weakness in Treasury prices in Tuesday’s session as the market built in a concession ahead of the sale, wrote analysts at BMO Captial Markets in a Wednesday note, adding that a further concession may dictate direction amid an empty economic calendar.

Meanwhile, “liftoff assumptions and the willingness of monetary policy makers to follow through on the perceived tapering and rate hike timelines continue to be the operative variables in dictating the price action — a dynamic we anticipate will persist heading into next week’s Fed meeting,” they wrote.

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