NEW YORK: US Treasury yields rose on Tuesday, giving back gains from Monday when month-end rebalancing boosted demand for the bonds, as investors waited on the completion of the Federal Reserve's meeting on Wednesday.
Treasuries ended October on a firm note even as benchmark 10-year notes posted their worst monthly performance since February 2015.
"We had month-end yesterday, and prices got a little bit too high," said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York.
Investors are now waiting on Wednesday's Fed statement for any new indications that an interest rate hike is likely at the US central bank's December meeting.
"I think they will lead us to the idea that they are going to move in December," Comiskey said.
Traders are pricing in a 78 percent likelihood that the Fed will raise rates in December, and only a 7 percent chance that the central bank will raise rates this week, according to the CME Group's FedWatch Tool.
Ten-year notes were last down 9/32 in price to yield 1.87 percent, up from 1.83 percent on Monday.
The yields have jumped from 1.54 percent at the end of September as the global growth outlook brightens. Improving inflation data in Europe and Asia has increased speculation that central banks globally will become less accommodating, sending global fixed income yields higher.
That view was further reinforced on Tuesday as data showed that activity in China's manufacturing sector expanded at the fastest pace in more than two years in October thanks to a construction boom.
The Bank of Japan held off on expanding stimulus on Tuesday despite once again pushing back the timing for hitting its inflation target, signaling that it will keep policy unchanged unless a severe shock threatens to derail a fragile economic recovery.
Comments
Comments are closed.