NEW YORK: US Treasury yields edged higher on Tuesday in quiet trading, tracking modest gains in Europe, as investors focused on upcoming congressional testimony from Federal Reserve Chair Janet Yellen that could shed more light on the pace of US monetary tightening.
Yellen will deliver her semi-annual monetary policy testimony before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday.
Investors will also be looking to Yellen for clues on when the Fed will start unwinding its massive balance sheet.
San Francisco Federal Reserve Bank President John Williams said in Sydney earlier on Tuesday that he still expected one more increase in interest rates from the Fed this year and for the central bank to start unwinding its massive balance sheet in the next few months.
Yields, which move inversely to prices, slipped on Monday in what analysts said was a retracement of previous gains that were fueled by a robust US non-farm payrolls report for June and recent comments by Fed officials on upcoming interest rate increases.
On Tuesday, the Treasury market was in the same consolidation mode in the absence of US economic data and ahead of Yellen's remarks.
"The Treasury market is in a holding pattern as we approach the more meaningful events on the immediate horizon - not the most exciting outlook to be sure, but one that is consistent with the broader tone in the market," said Ian Lyngen, head of US rates strategy at BMO Capital Markets in New York.
US Treasuries were also trading in tandem with European bonds, with the region's yields drifting higher as well. .
In late morning trading, the benchmark 10-year Treasury was yielding 2.383 percent, up from 2.371 percent late on Monday.
US 30-year yields were up, at 2.935 percent, compared with Monday's 2.923 percent.
On the front-end of the curve, US two-year yields were up slightly, at 1.391 percent, from Monday's 1.387 percent.
Later on Tuesday, the US Treasury will auction $24 billion in three-year notes.
Nomura Securities was optimistic about demand for US three-year notes.
"After the mixed US job data released last Friday, investors may still want to own some front-end given that the languishing wage growth could dampen some optimism in the Fed's outlook," wrote Nomura in a research note.
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