Treasury yields pulled back Monday as investors geared up for this week’s meeting of Federal Reserve policy makers.

What are yields doing?

The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.238%

fell to 1.249% versus a level of 1.286% late Friday afternoon. Yields fall as debt prices rise.

The 2-year note yield
TMUBMUSD02Y,
0.198%

was at 0.19% versus 0.2% on Friday.

The 30-year Treasury bond yield
TMUBMUSD30Y,
1.876%

declined to 1.887%, compared with 1.925%.

What’s driving the market?

Treasury yields saw volatile trade last week, with the 10-year rate dipping to a five-month low before bouncing back to briefly trade above 1.30%.

Yields were under renewed pressure Monday as global equities opened the week with a negative tone, undercut in part by U.S.-China tensions. China blamed the U.S. for a stalemate in bilateral relations as high-level talks began in the Chinese city of Tianjin.

The main event this week, however, is likely to be the two-day meeting of the Fed’s policy-setting Federal Open Market Committee, which will conclude on Wednesday.

Policy makers are expected to discuss plans around eventually slowing the pace of the Fed’s monthly bnd purchases. But investors expecting clear answers about the crucial questions of when the tapering will start and the pace of any pull back will likely be disappointed, economists said.

Read: Fed to tiptoe toward tapering this week

Investors will also deal with fresh supply, with the Treasury due to auction $60 billion in 2-year notes Monday.

What are analysts saying?

“ In all probability, the next change in the Fed’s monetary-policy stance will be a reduction of its asset purchases,” wrote analysts at UniCredit, in a Monday note.

“However, there is widespread belief that the central bank will not become more concrete in this regard at its upcoming meeting. Consequently, there is a decent chance that the FOMC meeting will not provide a major impulse towards higher yields,” they said “An extended period of (extremely) low government bond yields, in turn, would support general market sentiment, particularly if the rates complex remains immune to thriving developments in other market segments.”

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