US Treasury yields rose on Monday as oil prices pared earlier losses and investors focused on next week's Federal Reserve meeting. Treasury prices declined on what appeared to be investors adjusting positions early on Monday, and added to losses as oil prices recovered from their lows and stocks turned positive. US bonds had gained a bid overnight as oil prices plunged after a deal to freeze oil output by Opec and non-Opec producers fell apart on Sunday.
"Oil prices are going to continue to be very important to the market," said Mary Ann Hurley, vice president in fixed income trading at D.A. Davidson in Seattle. Benchmark 10-year notes fell 6/32 in price to yield 1.77 percent, up from 1.75 percent on Friday. With little economic data this week investors are focused on next week's Fed meeting.
The US central bank is seen as unlikely to raise interest rates this month though investors will be watching for any indications that it may hike rates at its June meeting. "Any insight that the Fed might have to offer in their statement on where they are collectively leaning in June would be useful," said Ian Lyngen, senior government bond strategist at CRT Capital in Stamford, Connecticut. New York Fed President William Dudley, a permanent voter on rates and a close ally of Fed Chair Janet Yellen, said on Monday that economic conditions are "mostly favourable" yet the Fed remains cautious in raising interest rates because threats loom.
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