Bond Report: U.S. government bond yields tick higher Monday after auctions


U.S. Treasury yields climbed Monday as investors digest a series of auctions, including a three-year and 10-year Treasury note sale, part of nearly $270 billion in debt set to be sold this week in what’s slated to be the most recent test of appetite for Treasurys.

The offerings come ahead of an important report on inflation, the consumer-price index, due Tuesday morning.

How did Treasurys perform?
  • The 10-year Treasury note

    was up 1 basis point to finish at 1.674%, based on a 3 p.m. Eastern close.
  • The 30-year Treasury bond

    was yielded 2.345%, picking up 0.2 basis point.
  • The 2-year Treasury note

    was at 0.171%, rising 1.4 basis points.

Bond prices move in the opposite direction to yields.

What drove the fixed-income market?

Fixed-income investors keyed in on a series of auctions that are expected to serve as a fresh gauge of the ability of bond buyers to take down new supply amid persistent worries about inflation pressures.

Auctions of three-year

and 10-year debt were described by market participants as mostly uneventful, if not slightly soft, while nudging yields slightly up on the short end of the curve.

The next three weeks will see the start of some $370 billion in U.S. Treasury auctions.

Investors also were focused on comments from Federal Reserve officials.

St. Louis Fed President James Bullard in an interview on Bloomberg Television. described inflation as the No. 1 worry in the economy, but said the picture about price pressure will be cloudy for most of this year.

“We’re in a period of a lot of uncertainty around inflation. The dust has to settle a little bit before we’ll find out where inflation really is and that probably happens later this year,” Bullard said, in the Monday interview.

Meanwhile, Boston Fed President Eric Rosengren said that the economy may take longer to return the normal than some hope.

“I expect a return of the economy to pre-pandemic levels will likely take longer than many private forecasters expect,” he said, adding that he viewed the Fed’s current stance on policy appropriate.

“With labor-market slack still significant, and inflation still below the Federal Reserve’s 2% target, my perspective is that the current highly accommodative stance of monetary policy is appropriate,” Rosengren said.

The central banker comments followed those from Fed boss Jerome Powell, during an interview on “60 Minutes” that aired on Sunday, where he emphasized that the Fed wouldn’t consider raising rates until the “labor market recovery is essentially complete” and the country is back to maximum employment and inflation around 2% for a sustained period.

“It’ll be a while until we get that in place,” he said.

What did market participants say?

“That said, as widely anticipated, the auctions came and went with remarkably little impact on the US rates market with perhaps the exception of an incremental rise in yields in a social nod to supply,” wrote BMO Capital Markets fixed-income strategists Ian Lyngen and Ben Jeffery in a Monday note.

“The absence of any meaningful data and the proximity to Tuesday’s inflation release offered all the excuse investors needed to leave the trading day to grind sideways with conspicuously low conviction. It was also notable that the results of the 10-year didn’t trigger a response in either direction,” the BMO analysts wrote.

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