Treasury yields fall as investors monitor coronavirus vaccine, recovery hopes

U.S. government debt prices were higher Tuesday morning, coming off a surge during the previous session following news of promising early testing of an experimental coronavirus vaccine.

At around 2:10 a.m. ET, the yield on the benchmark 10-year Treasury note was down at 0.7094% and the yield on the 30-year Treasury bond slipped to 1.4273%. Yields move inversely to prices.

Yields are stepping back from strong gains on Monday after biotech firm Moderna‘s closely watched early-stage human trial for a coronavirus vaccine produced Covid-19 antibodies in all 45 participants, sending risk assets surging to six-week highs.

However, investors are also monitoring hopes of a global economic recovery. IMF Managing Director Kristalina Georgieva suggested Monday that the recovery will take much longer than initially expected.

Georgieva said the IMF will likely revise downward its forecast for a 3% contraction in GDP in 2020, with only a partial recovery expected in 2021 instead of the 5.8% rebound previously anticipated.

Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin will testify before the Senate Banking Committee at 10 a.m. ET on Tuesday.

In a written testimony released late on Monday, Powell describes the coronavirus pandemic as having caused “a level of pain that is hard to capture in words” and calls on Congress to do more to match the Fed’s historic stimulus measures. He adds that the central bank is committed to using its “full range of tools” to support the economy.

On the data front, U.S. housing starts and building permits numbers for April are due at 8:30 a.m. ET on Tuesday.

Auctions will be held for $31 billion of 52-week Treasury bills, $40 billion of 119-day bills and $65 billion of 42-day bills.

– CNBC’s Yun Li contributed to this report.