BOND REPORT: Treasury Yields Slip As Fed's Evans Says Rates May Linger Lower For Longer

By Mark DeCambre, MarketWatch Features Dow Jones Newswires

Wall Street will await more clarity on tax-policy changes from House Speaker Paul Ryan later Tuesday

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U.S. Treasury yields traded slightly lower on Tuesday, as Boston Federal Reserve President Eric Rosengren said investors may need to get accustomed to a protracted period of low interest rates.

In a speech in Amsterdam, Rosengren said lower rates may be a more permanent fixture, and that dynamic could pose financial stability risks that central bankers and investors must take seriously (http://www.marketwatch.com/story/feds-rosengren-says-low-interest-rates-do-raise-financial-stability-concerns-2017-06-20). Rosengren isn't a voting member of the central bank's policy-setting Federal Open Market Committee, but he still participates in deliberations.

The yield on the 10-year Treasury note was down 1.4 basis point at 2.174%, compared with 2.188% late Monday in North American trade, while the 2-year Treasury note yield was off 1.2 basis point at 1.352%, compared with 1.364%. The yield on the 30-year Treasury bond , known as the long bond, was off 1 basis point at 2.759%.

Bond prices and yields move inversely.

Over the past 24 hours, investors have digested comments from a number of Fed speakers, offering mixed views on U.S. monetary policy.

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Late Monday, Chicago Fed President Charles Evans said the central bank could be done raising rates this year, offering a relatively dovish stance. The central bank official, who is a voting member this year of the Fed's policy-setting committee, said he supports the current policy of "very gradual" interest-rate hikes and a slow reduction of the balance sheet. Evans's comments came after New York Fed President William Dudley struck a more hawkish tone, arguing against slowing the pace of interest-rate increases, and describing the U.S. economy as "pretty good."

Dudley's remarks on Monday were cited as adding to yields extending gains (http://www.marketwatch.com/story/treasury-yields-climb-as-stocks-oil-lure-bidders-2017-06-19) following the Fed's Wednesday announcement of its plan to shrink it balance sheet as it cut key interest rates.

Amid the central bank's moves last week, sluggish inflation has led bond buyers to reassess expectations for a rate increase by the Fed in September, with expectations shifting to an increase--if at all--when the policy makers convene in December.

Looking ahead, investors await clarity from a speech by House Speaker Paul Ryan on tax reform, which could influence Wall Street investing.

At a speech slated to be delivered Tuesday afternoon in front of the National Association of Manufacturers, Ryan is expected to voice confidence in the GOP's ability to deliver tax-policy changes, which have been at the heart of the moves in markets, including the so-called reflation trade.

President Donald Trump had promised to bring into law a raft of pro-market stimulus measures, including tax cuts, deregulation and a boost to infrastructure spending. However, expectations that those policies could be delivered sooner than later have diminished amid drama centered on Russia's alleged ties to members of Trump's administration.

In Europe, the German benchmark 10-year yield, known as the bund, was at 0.29%, compared with 0.29% late Monday.

(END) Dow Jones Newswires

June 20, 2017 09:15 ET (13:15 GMT)