U.S. Treasury Bonds Edge Higher

FeaturesDow Jones Newswires

U.S. government bonds edged higher in quiet trade Tuesday following the holiday-extended weekend.

The yield on the benchmark 10-year U.S. Treasury note was recently at 2.532%, according to Tradeweb, compared with 2.551% Friday. Yields fall as bond prices rise.

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With few economic reports scheduled for release Tuesday, analysts said the focus would likely turn later in the day to Treasury auctions for 3-month, 6-month and 4-week bills.

Later in the week, investors will get a look at data on housing starts and jobless claims, as well as comments from multiple Federal Reserve officials.

Meanwhile, the yield on the two-year U.S. Treasury note extended its advance from last week.

The yield on the two-year U.S. Treasury note, which traders consider to be especially sensitive to expectations for interest-rate increases from the Fed, settled Friday above 2% for the first time since September 2008. The yield on the note was recently at 2.010%, compared with 2.001% Friday.

Shorter-term bonds have come under pressure lately as investors have increasingly bet on the Fed hiking rates multiple times this year.

Federal-funds futures, used by investors to place bets on the central bank's rate-policy outlook, showed Tuesday a 49% chance that the Fed will raise rates at least three-times this year, up from 33% one month ago, according to data provider CME Group.

Yields on longer-term bonds have also ticked higher since the start of the year, pressured by expectations for rising inflation. Inflation can pressure bonds by chipping away at the value of their fixed returns.

"The big debate of 2018" is whether recent readings on inflation translate into consistently higher core prices, said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets.

Write to Akane Otani at akane.otani@wsj.com

U.S. government bond prices swung before edging higher Tuesday following the holiday-extended weekend.

The yield on the benchmark 10-year U.S. Treasury note settled at 2.544%, compared with 2.551% Friday.

The yield on the 10-year note, which falls as bond prices rise, hit an intraday high around midday before retreating with U.S. stock indexes to end the day lower.

The muted moves came at the start of a week in which investors will get a look at data on housing starts and jobless claims, as well as comments from multiple Federal Reserve officials.

Meanwhile, the yield on the two-year U.S. Treasury note extended its advance from last week.

The yield on the two-year U.S. Treasury note, which traders consider to be especially sensitive to expectations for interest-rate increases from the Fed, settled Friday above 2% for the first time since September 2008. The yield on the two-year note settled Tuesday at 2.018%, compared with 2.001% Friday.

Shorter-term bonds have come under pressure lately as investors have increasingly bet on the Fed raising rates multiple times this year.

Federal-funds futures, used by investors to place bets on the central bank's rate-policy outlook, showed Tuesday a 50% chance that the Fed will raise rates at least three times this year, up from 33% a month ago, according to data provider CME Group.

Yields on longer-term bonds also have ticked higher since the start of the year, pressured by expectations for rising inflation. Inflation can pressure bonds by chipping away at the value of their fixed returns.

"The big debate of 2018" is whether recent readings on inflation translate into consistently higher core prices, said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets.

Write to Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

January 16, 2018 16:07 ET (21:07 GMT)

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