NEW YORK, Nov 26 (Reuters) - Treasury bond prices fell on Monday morning, driven lower by U.S. equity prices which rose on hopes for a profitable Cyber Monday, and as the possibility of a Brexit deal boosted riskier assets.
Across maturities, U.S. government bond yields were up about 2 basis points, with longer-dated yields moving slightly slower, narrowing the spread between two- and 10-year yields since the market open.
“Equity futures are up this morning - that risk-on move is pushing yields higher” said Michael Cloherty, head of U.S. rates strategy at RBC Capital Markets.
U.S. stocks opened higher on Monday, as optimism of a robust holiday season powered gains in shares of retailers and technology stocks, which bounced back after a brutal sell-off last week. The Dow Jones Industrial Average rose 0.32 percent to 24,364 at the open. The S&P 500 opened 0.66 percent higher at 2,649.
Wall Street’s main indexes fell more than 3 percent last week, with the Dow and the Nasdaq posting their biggest weekly percentage declines since March, on plunging oil prices, worries about slowing global growth and peaking corporate earnings.
Waning uncertainty in Europe over the United Kingdom’s deal to exit the euro zone and Italy’s spending plans also boosted yields on Monday as investors regained their appetite for risk.
“Looking forward, we will continue to take cues from risk assets,” said Cloherty, both because of the reduced global political uncertainty and the strength of U.S. equities.
EU leaders finally sealed a Brexit deal on Sunday, saying the package agreed upon with Prime Minister Theresa May was the best Britain would get, in a warning to the British parliament not to reject it. Getting approval from parliament is not a foregone conclusion, as pro-Brexit members may ally with those who are anti-Brexit in an effort to secure more favorable terms.
European markets rallied on Monday on signs that Italy was preparing to rework the spending plans that have fueled tensions with Brussels. Deputy Prime Minister Matteo Salvini had hinted over the weekend at the possibility of tweaking the country’s budget deficit goal, boosting the Italian bank stock index 5 percent to its strongest day since June.
The benchmark 10-year U.S. government bond yield was last at 3.074 percent, up 2 basis points. The 30-year yield was 1.3 basis points stronger at 3.23 percent, and the two-year yield was 2.1 basis points stronger at 2.841 percent.
Later on Monday, the U.S. Treasury Department will be auctioning off $39 billion of new two-year notes, an increase in supply by $1 billion from the month prior. (Reporting by Kate Duguid; Editing by Andrea Ricci)