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Treasuries rise ahead of Fed, 10-year yields dip to 4.64%
Monday’s advance cut yields roughly 1.0 to 4.0 basis points and supported demand at a $69 billion two-year note auction even as oil prices fell.
US Treasuries rose on Monday as the US paused strikes on Iran and oil prices declined, helping push yields lower ahead of the Federal Reserve’s upcoming meeting, LiveMint Markets said, citing Bloomberg. Across the curve, yields fell by around one to four basis points, with the 10-year note down to 4.64%, below its year to date peak hit last week. Traders still saw about a one in three chance of a Fed hike this week, but the recent yield surge supported demand at a $69 billion auction of two-year Treasuries, while five-year notes drew less interest. Interest-rate strategists attributed some of the market positioning to uncertainty around the new Fed chair, with attention on Kevin Warsh’s second meeting and his stated goal of avoiding commentary that could signal policy plans. While June inflation data showed signs of easing, a prior surge in oil prices renewed concerns, and the geopolitical backdrop in the Middle East remained volatile despite President Donald Trump saying he paused strikes to allow negotiations. Oil moves were reflected in Brent crude falling below $90 a barrel, while overnight-indexed swaps still implied nearly a 40% chance of a quarter point rate increase at the meeting. By contrast, almost all economists surveyed expected rates to remain unchanged, and traders were fully pricing in a hike by September, with some strategists expecting Warsh and other Fed officials to be more hawkish and add upward pressure to yields.
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