NEW YORK: Most US Treasury yields fell on Monday as investors lowered expectations that the Federal Reserve will raise interest rates in June, after a weaker-than-expected jobs report for April on Friday.
Yields fell to one-month lows on Friday after data showed employers added the fewest jobs in seven months in April, but ended the day higher as investors focused on wage growth as a sign that inflation may be picking up.
The yields fell again on Monday as investors evaluated when the Fed is likely to raise rates.
"The fact that the front-end is outperforming is consistent with the notion that June isn't particularly a high probability month for a move, despite what Dudley had said and what some of the speakers had come up with," said Ian Lyngen, a senior government bond strategist at CRT Capital in Stamford, Connecticut.
New York Federal Reserve President William Dudley said on Friday that two interest rate hikes this year remain a "reasonable expectation," despite the weaker jobs data.
Wall Street's top banks have all but abandoned any expectation that the Fed will raise rates in June, and most now see the US central bank's next hike coming in September, according to a Reuters survey conducted on Friday.
Benchmark 10-year notes were last up 4/32 in price to yield 1.77 percent, down from 1.78 percent late on Friday. The yields briefly fell to 1.71 percent on Friday after the employment report, the lowest since April 11.
Two-year notes, which are highly sensitive to interest rate changes, gained 1/32 in price to yield 0.72 percent on Monday, down from 0.74 percent on Friday. The yields have fallen from 0.88 percent on April 27.
Investors expect relatively heavy debt supply this week with the US government's quarterly refunding and a strong corporate debt sale calendar. The Treasury will sell $62 billion in debt including $24 billion in three-year notes on Tuesday, $23 billion in 10-year notes on Wednesday and $15 billion in 30-year bonds on Thursday.
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