BOND REPORT: Treasury Yields Dip Ahead Of Fed Speeches

By Sunny Oh Features Dow Jones Newswires

Central bankers will touch on the 2% inflation target, a goal that has proved elusive and mystifying for the Federal Reserve.

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Treasury prices rose, pulling yields lower, on Monday as investors looked forward to a bevy of central bank speeches, key economic data and newly issued debt.

What are Treasurys doing?

The yield for the 10-year benchmark note fell a basis point to 2.468%. The 2-year note yield fell 1.2 basis points to 1.952%. The 30-year bond yield dipped a basis point to 2.801%.

Bond prices move inversely to yields.

What's driving markets?

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A raft of central bankers are set to speak this week, following the last minutes from the Federal Open Market Committee that showed the Fed had not factored in the economic impact of the tax bill on monetary policy forecasts. If the legislation gooses growth, that could prompt the Fed to raise rates more than the two or three times investors are expecting this year.

Atlanta Fed President Raphael Bostic will give a talk at 12:40 p.m. Eastern. Soon after, San Francisco Fed President John Williams will speak in the "Should the Fed stick with the 2% inflation target or rethink it?" forum at 1:35 p.m. At the same conference, Boston Fed President Eric Rosengren will also take part in a panel.

Bond traders will deal with fresh supply as the Treasury Department is set to issue 3-year note, 10-year note and 30-year bond arrive this week. But the highlight for most will be the consumer-price index on Friday, a decisive economic number that could help fulfill investor's expectations for stronger price pressures in the coming years. The 10-year break-even rate (https://fred.stlouisfed.org/series/T10YIE), the bond market's gauge for future inflation, broke above the 2% level for the first time since March.

Read:Is inflation ever coming back? (http://www.marketwatch.com/story/is-inflation-ever-coming-back-2018-01-06)

What did market participants say?

"Aside from nominal supply, Friday's CPI is huge. Accelerating inflation (and earnings) has been the biggest missing piece in Fed projections over recent years," wrote Bonnie Anasetti, a trader of Treasury-inflation protected securities for Jefferies.

What else are on investors' radar?

The possibility of a partial government shutdown has been pushed back later to February or March as Congress is expected to pass another stopgap spending bill to keep the government funded beyond Jan. 19. But some say President Donald Trump's demands for financing for a border wall and the Democrats' priorities on immigrations will clash, driving up uncertainty on a successful resolution.

How are other assets doing?

The German 10-year government bond yield fell 2.5 basis points to 1.482%, according to data from FactSet. The U.K. 10-year bond yield followed suit, slipping 2.5 basis points to 1.223%.

(END) Dow Jones Newswires

January 08, 2018 09:13 ET (14:13 GMT)