NEW YORK: US Treasury debt prices rose on Monday, recovering after an aggressive selloff last week, as investors tried to get back to neutral positions ahead of this week's two-day Federal Open Market Committee meeting.
Benchmark 10-year yields hit a five-week high on Friday, capping broad gains on the back of the European Central Bank's suite of stimulus measures to revive a slumping euro zone economy. The ECB moves boosted riskier assets last week such as stocks and weighed on safe havens such as U.S. Treasuries. That rise in yields is now being unwound.
"This is really just pre-positioning ahead of Wednesday's FOMC. I don't think there is anything more significant to it than that," said David Keeble, global head of interest rates strategy at Credit Agricole.
"We also sold quite aggressively last week, so people are just taking risk bets off the table."
Investors expect the Federal Reserve to hold interest rates steady on Wednesday, and are focusing instead on the FOMC statement, which could lower the outlook for the number of U.S. rate hikes this year.
Still, since the January meeting in which the Fed took note of the recent slowing of the U.S economy, the decline in inflation, and external factors including China and oil prices, things have stabilized a little bit.
"We don't anticipate much of a shift in terms of sentiment frankly, if anything we've seen some stabilization in risk assets in the inter-meeting period which offsets the tighter financial conditions that have been a concern," said CRT Capital in a research note on Monday.
"This points to a less dovish statement, but one that needs to be dutifully cautious on the outlook to justify not tightening now."
In mid-morning trading, the benchmark 10-year note rose 6/32 in price to yield 1.955 percent from 1.993 percent on Friday.
The 30-year bond was last up 16/32 in price to yield 2.720 percent, down from 2.762 percent late on Friday.
Comments
Comments are closed for this article.