NEW YORK: US government debt prices fell on Monday in choppy trading with benchmark yields hovering near two-month highs, as traders waited for further clues on whether US growth will be strong enough for the Federal Reserve to taper its bond purchases.
Speculation about whether the Fed will begin slowing its bond purchases later this year has sent yields surging this month as analysts become more comfortable with the view that the economy is on a firmer footing and job growth is on a sustainable path.
Traders and analysts anticipated Treasuries will likely move in a tight range over the next few days, as investors await clues on where the US central bank stands on quantitative easing from Fed Chairman Ben Bernanke, who will testify about the economy before a congressional panel on Wednesday.
"The market is going to have a hard time moving away from its current level ahead of the Bernanke testimony," said Stan Shipley, a bond strategist with ISI Group in New York.
Treasuries prices rose earlier in a rebound from Friday's losses, before sliding again in the afternoon.
Benchmark 10-year Treasuries notes were last down 3/32 in price to yield 1.96 percent, up from 1.95 percent from late Friday.
The yields are holding just under their two-month highs of 1.985 percent reached on Wednesday. They have surged from 1.64 percent at the beginning of May.
A weaker dollar helped cap the decline in US bond prices as it makes it cheaper for foreign investors to buy Treasuries and other assets.
The greenback retreated against the yen and other major currencies after Japan's Economy Minister Akira Amari remarked its currency might have weakened enough in the wake of a bold $1.4 trillion monetary plan announced in April.
The yen fell to a 4-1/2-year low against the dollar last week.
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