NEW YORK: US Treasuries prices rose modestly on Wednesday following two days of testimony from Federal Reserve Chair Janet Yellen, which traders interpreted as suggesting the Fed could hike rates later than mid-year, and a solid five-year note auction.
Yellen's testimony to the House Financial Services Committee was identical to one she delivered Tuesday to the Senate Banking Committee. She did not offer additional insight on the timing of a rate increase before the House panel.
Whether to raise rates will depend on economic data and will be decided on a meeting-to-meeting basis, Yellen said Tuesday. Without any notable change to that message on Wednesday, traders bid up Treasuries for a second straight day on the view that the Fed was giving itself more flexibility to raise rates later than in June.
Firm demand at the Treasury's auction of $35 billion in five-year notes also supported Treasuries. The ratio of total bids submitted to the amount offered was 2.54, higher than January's 2.49 and the strongest since November's 2.91.
"A favorable five-year result against the backdrop of what the Fed articulated yesterday continued the positive trend in bond prices," said William Ehling, market strategist and client portfolio manager at Federated Investors in Pittsburgh.
Analysts also said purchases ahead of month-end portfolio adjustments and a drop in European yields, which made U.S. yields more attractive, contributed to the move lower in U.S. yields. Yields move inversely to prices.
U.S. 30-year yields hit a nearly two-week low of 2.56 percent, while benchmark 10-year yields held near a more than two-week low of 1.96 percent hit early in the session.
Investors eyed U.S. Consumer Price Index data for January due on Thursday, which is expected to show a 0.6 percent decline and could add to expectations for a dovish Fed.
"If you have any further deceleration in core CPI ... expectations for the PCE, which is the Fed's favorite measure, may go down from there," said Anthony Valeri, fixed-income strategist at LPL Financial in San Diego. "That would further bolster the case that the Fed would wait to raise interest rates."
U.S. 30-year Treasuries were last up 20/32 in price to yield 2.56 percent, from a yield of 2.60 percent late Tuesday. Ten-year notes were last up 6/32 to yield 1.96 percent, down from 1.99 percent late Tuesday.
U.S. five-year notes were last up 1/32 to yield 1.45 percent, unchanged from late on Tuesday.
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