Bonds steady before heavy data week

NEW YORK: Treasuries were steady on Monday before a busy week of data that will be scrutinized for further signs that US economic growth is slowing.

Investors will focus on retail sales on Tuesday, manufacturing indicators on Wednesday and Thursday, and consumer prices and sentiment on Friday.

Weaker-than-expected jobs growth in March and a more dovish Fed has added to expectations that the US central bank will wait longer before raising interest rates. Until the recent spate of weakening data, some investors thought a rate increase in June was likely.

"The general sense is that between the disappointing non-farm payrolls release and the (Fed) minutes, expectations have been pushed back further into the year, so if you were June/July, September or later starts to seem more likely," said Ian Lyngen, a senior government bond strategist at CRT Capital in Stamford, Connecticut.

Benchmark 10-year notes were last up 3/32 in price to yield 1.94 percent, down from 1.95 percent late on Friday.

The Fed will also release its Beige Book of economic conditions on Wednesday afternoon. A number of Fed officials are also scheduled to speak this week, including Vice Chair Stanley Fischer on Thursday.

A talk on Wednesday night by Simon Potter, the head of the markets group at the New York Fed, will also be in focus as investors evaluate how the Fed may deal with the technical aspects of raising rates.

Fed officials said they may temporarily increase the amount of Treasuries they lend in its reverse repurchase program when they begin hiking rates, though they also expressed concerns that the program may be too large and discussed ways to reduce its size, according to meeting minutes. The overnight program is currently capped at $300 billion.

"The minutes raised some concern about the Fed's exit plans," said Michael Cloherty, head of US rates strategy at RBC Capital Markets. "It looked like they were starting to come to terms with how to exit in the January minutes, then they completely undid that in March."

In reverse repos, the Fed temporarily drains cash from the financial system as a way to help control short-term interest rates. Excess cash could keep rates lower than desired by the Fed at a later date.