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Illustration: Sarah Grillo/Axios

Long-dated U.S. Treasury yields jumped on Tuesday, as momentum pushed bond investors to sell and join the risk-on party in financial markets.

Why it matters: Bond investors have largely been incredulous about the prospects for U.S. growth and inflation — but recent good news on COVID-19 vaccines, global manufacturing data and U.S. holiday retail sales helped push yields on the 10-year Treasury note up by the most in nearly a month.

By the numbers: Yields on the 10-year jumped by more than 9 basis points to 0.938%, the highest since Nov. 12, and the spread between 2-year and 10-year yields widened to the largest since Nov. 12.

  • Yields on the 10-year are now knocking on the door of 1%, a level not seen since March.
  • Breakeven rates for 10-year Treasury Inflation Protected Securities (TIPS) reached 1.82%, the highest since May 2019.

What we're hearing: Investors are finally starting to take their money out of safe-haven Treasuries and move consistently into equities and some areas of the market that previously had been deemed too risky, Ellis Phifer, market strategist at Raymond James, tells Axios.

  • "Europe and EM have been beaten up a lot and that’s where the money starts going, where people feel they can put a little risk back out there."
  • "It’s hard to get too excited but we did see some rotation that is pretty significant into more risky assets from the bond market."

Watch this space: The Institute of International Finance estimates that emerging market securities attracted around $76.5 billion in November, more than triple the $23.5 billion fund flow in October.

  • "As a result, Q4 2020 is likely to be the strongest quarter for EM inflows since Q1 2013, i.e. since just before the 'taper tantrum,'" IIF economist Jonathan Fortun said in a report.

Don't sleep: More Wall Street analysts are jumping on the bull bandwagon. Barclays released a cadre of late-night notes to clients Tuesday touting their expectations for equity prices to continue higher.

  • "We remain overweight risk assets over core bonds, as investors look through the near-term drag of the winter COVID surge and focus instead on a resilient global economy and a faster return to normalcy in 2021," Barclays analysts said.
  • They project a "drift higher in core fixed income yields, and for emerging markets to do well."

The bottom line: Even with rising COVID-19 diagnoses and continued uncertainty about fiscal stimulus (Senate Majority Leader Mitch McConnell rejected a proposed bipartisan coronavirus stimulus package yesterday), Wall Street looks to be all-in on risk right now.

Go deeper

Trump stock market underperformed Obama's

Data: Yahoo Finance; Chart: Andrew Witherspoon/Axios

U.S. stock markets hit record highs during President Trump's time in office, but mostly underperformed his predecessor.

By the numbers: The stock market selloff that followed the outbreak of the coronavirus pandemic wiped out three and a half years' worth of market gains for Trump. As of March 23, 2020, the S&P 500 had lost 1.5% since Trump's first day in office.

Updated 6 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Eniola Odetunde/Axios

  1. Health: Most vulnerable Americans aren't getting enough vaccine information — Fauci says Trump administration's lack of facts on COVID "very likely" cost lives.
  2. Politics: Biden unveils "wartime" COVID strategyBiden's COVID-19 bubble.
  3. Vaccine: Florida requiring proof of residency to get vaccine — CDC extends interval between vaccine doses for exceptional cases.
  4. World: Hong Kong to put tens of thousands on lockdown as cases surge.
  5. Sports: 2021 Tokyo Olympics hang in the balance.
  6. 🎧 Podcast: Carbon Health's CEO on unsticking the vaccine bottleneck.

Trump impeachment trial to start week of Feb. 8, Schumer says

Senate Majority Leader Chuck Schumer. Photo: The Washington Post via Getty

The Senate will begin former President Trump's impeachment trial the week of Feb. 8, Majority Leader Chuck Schumer announced Friday on the Senate floor.

The state of play: Schumer announced the schedule after reaching an agreement with Republicans. The House will transmit the article of impeachment against the former president late Monday.