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ECONOMIC GROWTH - NEW YORK. Most U.S. Treasury yields fell slightly on Tuesday after U.S. Treasury Secretary nominee Janet Yellen said during Senate confirmation testimony that tax cuts enacted in 2017 for large corporations should be repealed.
Yellen, a former Federal Reserve chair, also urged lawmakers to "act big" on the next coronavirus relief package, adding that the benefits outweigh the costs of a higher debt burden.
"Though the amount of debt relative to the economy has gone up, the interest burden hasn't," she told the Senate Finance Committee.
Yellen said she believed some of the signature 2017 tax reform act should be repealed, such as the cut in corporate tax rates, although rates would not go back to their pre-2017 levels.
Benchmark 10-year yields traded just off their session low of 1.090%, falling from earlier slight gains.
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Jack Ablin, chief investment officer at Cresset Asset Management in Chicago, said he wasn't sure the market reacted to Yellen's testimony as she is a known quantity, and that it had reacted when her nomination was first announced.
"I don't think there's any doubt she'll be approved. This is just reaffirming what most investors already perceive," Ablin said. "She's really just representing the (incoming) administration as a cabinet member would."
President-elect Joe Biden, who will be sworn into office on Wednesday, outlined a $1.9 trillion stimulus package proposal last week, saying bold investment is needed to jump-start the economy and accelerate the distribution of vaccines to bring the coronavirus under control.
Earlier, breakeven interest rates on U.S. 10-year TIPS, which measure expected annual inflation for the next 10 years, rose to a more than a two-year high of 2.11%, up from 2.089% on Friday.
The 5-year TIPS yield traded at its lowest closing yield since April 2013 at -1.714%, down 8.7 bps so far this year from its final close in 2020 of -1.627%, according to Tradeweb.
