NEW YORK: US Treasuries were steady in light trading volumes before the Christmas holiday with no new economic data due on Wednesday, as investors evaluated how many times the Federal Reserve is likely to raise interest rates next year.
"We've been trading in a fairly tight range the last couple of days with low volumes. It's very holiday like trading," said Dan Mulholland, head of Treasuries trading at Credit Agricole in New York.
"I think people are trying to assess how the next year is going to start off," Mulholland said.
Benchmark 10-year notes were little changed in morning trade to yield 2.56 percent.
Yields have soared since Donald Trump's election as US President last month as investors bet that he will implement new fiscal stimulus that boosts growth and inflation.
The Fed was also more hawkish than expected at its December meeting last week, indicating that it may raise rates three times next year.
That helped to send 10-year note yields to a more than two-year peak and two-year note yields to their highest levels since 2009.
Investors are evaluating whether the recent backup in yields makes it a good time to buy bonds, of if yields are likely to rise much further.
"In assessing the risk of where the market is, the risk of disappointment from what people are counting on Trump to do in terms of fiscal stimulus is probably a little bit to the downside rather than overdelivering on the upside," said Mulholland.
"With that in mind we do think the market is a little bit oversold at present," Mulholland said.
New supply of two-year, five-year and seven-year notes next
week, however, could add pressure to bonds as the auctions will come in a holiday-shortened week when many traders will be on vacation.
Data on Thursday, including the third estimate of third-quarter gross domestic product and personal income and
spending, will be watched for further indications about the strength of the US economy.
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