NEW YORK: US Treasuries were steady on Tuesday as investors evaluated when the Federal Reserve is likely to next raise interest rates, a day after Fed Chair Janet Yellen was viewed as taking a less hawkish view on rate hikes.
In a highly anticipated speech on Monday Yellen gave a largely upbeat assessment of the US economic outlook and said interest rate hikes are coming but, in an omission that stood out to some investors, gave little sense of when.
Traders have pushed back rate-hike expectations to September, at the earliest, after Friday's jobs report for May showed that employers added only 38,000 jobs in the month, the smallest gain since September 2010.
Hawkish speeches by numerous Fed officials before the report had led investors to conclude that a hike at the Fed's June or July meeting was possible.
"The probabilities for hikes are basically back to where they were before the Fed started talking," said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York.
"The more central banks try to sound hawkish the more disservice they do to themselves because the data weakens and they are forced to back off," Kohli said.
Benchmark 10-year notes were last up 1/32 in price to yield 1.719 percent, down from 1.723 percent late on Monday. The yields have risen from two-month lows of 1.697 percent on Friday, after the weak jobs report.
Data on Tuesday showed that US nonfarm productivity fell less sharply than previously thought in the first quarter, but labor-related costs still surged as companies employed more workers to boost output.
With no major economic releases due this week, investors are focused on next week's Fed meeting, and new Treasury supply.
The Treasury will sell $24 billion in three-year notes on Tuesday, the first sale of $56 billion in new coupon-bearing supply this week. The government will also sell $20 billion in 10-year notes on Wednesday and $12 billion in 30-year bonds on Thursday.