Treasuries move higher

US Treasury debt prices rose on Monday after the Federal Reserve purchases reminded investors that influential Fed officials believe it is too soon to talk of lifting the accelerator on monetary ease, a view that should support bonds in the weeks ahead.
New York Fed Bank President William Dudley, one of the US central bank's most powerful policy makers, said on Friday there was no reason for the Fed to reverse a policy designed to avoid deflation and spur employment. On Monday, Atlanta Fed President Dennis Lockhart said US inflation was likely to remain moderate and, in an interview with Reuters, St. Louis Fed Research Director Christopher Waller said the Fed was likely to buy all of the bonds it has said it would purchase by June 30 and reinvest securities for a while after that before beginning to tighten financial conditions.
"In the recovery from the 1990-91 recession, the Fed waited until 3.770 million jobs had been created over the course of two years before hiking rates the first time," said Bank of Tokyo/Mitsubishi UFJ chief financial economist Chris Rupkey. The economy lost 8.8 million payroll jobs in the most recent recession, and 1.8 million of those jobs have been "hired back" from February 2010 to March 2011, Rupkey noted.
The Fed bought $8.03 billion of Treasuries maturing between November 2016 and March 2018, the largest buy since February 7. Seven-year Treasury notes rose 9/32 in price, their yields easing to 2.86 percent from 2.91 percent late Friday, while five-year notes rose 9/32, their yields easing to 2.19 percent from 2.25 percent on Friday.
IFR said investors also took an inTwo-year notes rose 2/32, their yields easing to 0.77 percent from 0.80 percent on Friday. Benchmark 10-year notes rose 7/32 in price, their yields easing to 3.42 percent from 3.45 percent late Friday. Support for 10-year notes lies at 3.50 percent and 3.56 percent and resistance lies at 3.25 percent, analysts said. Thirty-year bonds rose 4/32, their yields easing to 4.48 percent from 4.49 percent on Friday.
Tradeweb volume was about 90 percent of the 10-day of the moving average, no surprise on a Monday with no economic data. Volume in medium-term Treasuries was 115 percent of the 10-day moving average, undoubtedly given a boost by the Fed's purchases in that sector of the yield curve.