U.S. Treasury yields were seeing subdued moves Monday morning, as investors parsed comments from Federal Reserve Chairman Jerome Powell during a “60 Minutes” interview and braced for some $370 billion in debt auctions over the coming three weeks.
How are Treasurys performing?
The 10-year Treasury note TMUBMUSD10Y, 1.671% was at 1.666%, up 0.2 basis point.
The 30-year Treasury bond TMUBMUSD30Y, 2.341% was yielding 2.329%, off 1.1 basis points.
The 2-year Treasury note TMUBMUSD02Y, 0.164% was at 0.157%, virtually unchanged from Friday’s 3 p.m. Eastern Time close.
Bond prices move in the opposite direction to yields.
What’s driving the fixed-income market?
This week brings the start of nearly $300 billion in U.S. Treasury auctions, as well as a report on U.S. inflation. That could help to spark a fresh move in U.S. government bonds, which have tried to stage a steady climb, as prices slide, amid an expected economic rebound from the coronavirus pandemic.
About $270 billion in sales will be auctioned this week, which some fixed-income strategists view as a fresh test of the resilience of the Treasury market.
A key report on inflation, the consumer-price index, will be released on Tuesday, and is expected to be closely watched for signs of out-of-control inflation increases. On Friday, the producer-price index showed a rise of 1% in March. well above a 0.5% gain expected by the Wall Street Journal. Another measure preferred by economists, known as core PPI, rose 0.6%.
The CPI data due Tuesday are expected to show consumer prices picked up in March.
During Powell’s “60 Minutes” interview, he emphasized that the Fed wouldn’t consider raising rates until the “labor market recovery is essentially complete, and we’re back to maximum employment and inflation is back to our 2% goal and is on track to move above 2% for some time.
“It’ll be a while until we get that in place,” he said.
What are market participants saying?
“This week will be dominated by US Treasury supply of 3yr & 10yr auctions today and a 30yr auction at 1 p.m. on Tuesday,” wrote Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities.
“Japanese investors are possible buyers due their new year starting in April. However, we believe the market is rather vulnerable to higher rates due to Tuesday’s CPI data which will most likely be quite strong,” he wrote.