This post was originally published on this site
Erin Scott/Bloomberg News
U.S. Treasury yields were inching higher in early trade Monday as investors waited for the Federal Reserve meeting later this week.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.670% rose a basis point to 0.677%, while the 2-year note rate TMUBMUSD02Y, 0.133% edged 0.6 basis point higher to 0.135%. The 30-year bond yield TMUBMUSD30Y, 1.408% was up 0.8 basis point to 1.424%. Bond prices move in the opposite direction of yields.
What’s driving Treasurys?
Global equity markets were trading up on Monday, with stock futures pointing to a higher open for Wall Street. The demand for assets perceived as risky appeared to limit appetite for haven assets such as government paper.
In a day absent of key economic data, investors would mostly focus on this week’s Fed meeting that could offer clues on how the central bank sees the economic outlook, following a sharp decline in the unemployment rate in August.
Market participants also said there may be some moves ahead of Tuesday’s $22 billion 20-year note auction. New supply can weigh on trading for the outstanding bond market.
Read: Here’s why markets shouldn’t overlook the Fed meeting next Wednesday
What did market participants say?
“The rapid decline of the unemployment rate to below 9% over the summer (9.1% if adjusted) means the Fed’s year-end objective has been undershot four months early, so a lower forecast will follow on Wednesday ,” said Kenneth Broux, a strategist at Société Générale.
“An upward revision to the growth outlook is also possible, and taken together, this could be a fillip for risk sentiment and add steepening impetus to U.S. [and European government bond] yield curves,” said Broux.
