NEW YORK: U.S. government bond yields dipped on Monday as traders look ahead to data on Tuesday that is expected to show a continuing slowdown in the pace of consumer price increases.
The core reading of the U.S. consumer price index is expected to show a rise of 0.3pc in August, down from 0.5pc the previous month and 0.9pc in June.
Shortages of basic materials and parts have created bottlenecks - and price increases - across various supply chains.
The U.S. Federal Reserve is paying close attention to price pressures as it mulls when to begin to reduce its massive bond holdings and how soon to begin lifting interest rates from near zero.
It also remains on the lookout for any signs that price pressures may broaden.
There are no scheduled Fed speakers this week ahead of next week's Federal Open Market Committee (FOMC) meeting.
"Now that we're into the blackout period, we'll have to rely on the data to form our opinions on what the Fed will decide next week and in the final months of the year, starting with the inflation readings on Tuesday," said Craig Erlam, a senior market analyst at Oanda.
"Any indication that inflation is not as transitory as the central bank currently believes could pile on the pressure to remove stimulus more aggressively and cause some distress in the markets."
The yield on 10-year Treasury notes was down 1.8 basis points at 1.323pc.
The yield on the 30-year Treasury bond was down 3.1 basis points at 1.903pc.
The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 0.2 basis points at 0.215pc.
Yields are seen remaining in a tight range after last week's 10- and 30-year auctions were met with strong demand. Monday's 3- and 6-month bill auctions were also well received.