BOND REPORT: Treasury Yields Hold Their Ground As Investors Await Yellen Testimony

By Sunny Oh Features Dow Jones Newswires

Looking ahead, the Treasury Department will auction off $24 billion of 3-year notes at 1 p.m. Sales of government bonds can influence trading in the outstanding market.

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In Europe, the yield on the 10-year German bond, known as the bund , was at 0.55%, as the recent global rout in sovereign bond yields, attributed to hawkish comments from European Central Bank head Mario Darghi, abated.

A selloff in Treasurys steadied on Tuesday as market participants looked ahead to Janet Yellen's testimony in front of Congress Wednesday and Thursday to see if she deviates from her stance that weakness in inflation is transitory and maintains the outlook for monetary tightening this year.

The benchmark 10-year Treasury note rose 0.4 basis point to 2.375%. Bond prices move inversely to yields. 30-year bond gained 0.3 basis point to 2.925%, while the 2-year Treasury yield fell 0.4 basis point to 1.387%.

Fed Chairwoman Yellen will give testimony to Congress, starting with the Senate Banking Committee on Wednesday as part of the semiannual monetary policy report.

"This week will be very important as it will start to set the stage for the September [Federal Open Market Committee] meeting," wrote Thomas Simons, senior money markets economist for Jefferies.

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Analysts expect the Fed to start reducing its $4.5 trillion balance sheet at the September policy meeting.

Meanwhile, San Francisco Fed President John Williams, a nonvoting member, reiterated his expectation for one more rate increase this year and the central bank to start reducing its balance sheet in the next few months. Fed Gov. Lael Brainard will give the keynote address on "Normalizing Central Banks" at New York City at 12:30 p.m. Eastern.

On the economic data front, May's Job Openings and Labor Turnover Survey, known as JOLTS, showed that hiring climbed to 429,000 to 5.47 million in May, while job openings fell by 301,000 to 5.66 million on the month. The report showed that hiring in May was its strongest since 2004 (http://www.marketwatch.com/story/hiring-in-may-strongest-since-2004-jolts-shows-2017-07-11), underlining strength in the labor market.

In other economic data, a reading of wholesale inventories showed an increase by 0.4% in May, while a reading of small-business sentiment fell in June as business owners grew increasingly frustrated (http://www.marketwatch.com/story/small-business-sentiment-falls-as-economic-expectations-slide-sharply-2017-07-11) with Washington, D.C. gridlock.

(END) Dow Jones Newswires

July 11, 2017 10:35 ET (14:35 GMT)