NEW YORK: US Treasury yields rose to four-week highs on Monday in advance of a $26 billion auction of two-year notes and as investors awaited clues on future interest rate increases from the Federal Reserve.
An unexpected drop in domestic new home sales in March supported a view of weak economic growth in the first quarter and rekindled some bids for US government debt, analysts said.
In light of the recent disappointing car sales and data on trade and factory activity, almost no analysts and investors expected the US central bank to hike policy rates at a meeting scheduled on Tuesday and Wednesday.
The Fed is expected to lift the target range on rates by a quarter point at its June meeting to 0.50-0.75 percent, according to a Reuters poll last week.
"They want to keep June on the table, but it's going to be difficult. There's no incentive for them to raise rates," said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research in New York.
Benchmark 10-year Treasury notes were little changed in price with the yield at 1.888 percent. Earlier Monday, the 10-year yield reached 1.904 percent, which was its highest since March 28, according to Reuters.
The two-year note's yield, which is sensitive to traders' view on Fed policy, was 0.822 percent, unchanged from late on Friday.
The two-year yield hovered at its highest in nearly a month ahead of new supply at 1:00 p.m. ET (1700 GMT).
The Treasury Department will sell $34 billion in five-year debt on Tuesday and $28 billion in seven-year notes on Thursday.
In "when-issued" activity, traders expected the latest two-year debt supply to sell at a yield of 0.835 percent , compared with a yield of 0.877 percent at the prior auction in March, according to Tradeweb.
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