US Treasury yields rose on Monday as investors looked ahead to testimony by Federal Reserve Chair Janet Yellen on Tuesday and Wednesday and as record high stock markets reduced demand for bonds. Investors will be watching for any new indications of when the US central bank will next raise rates when Yellen gives her semiannual Humphrey Hawkins testimony before lawmakers in Washington.
Investors reduced expectations of a rate hike at the Fed's March meeting after jobs data for January showed disappointing wage growth. However, "if she says something hawkish, there's definitely a reason to believe they could go in March," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York.
Benchmark 10-year notes fell 7/32 in price to yield 2.43 percent, up from 2.41 percent late on Friday. Futures traders are currently pricing in an 18 percent likelihood of a March rate hike, according to the CME Group's FedWatch Tool.
Fed Vice Chair Stanley Fischer said on Saturday that there was significant uncertainty about US fiscal policy under the Trump administration, but the Fed would be strict in meeting targets of creating full employment and getting inflation to 2 percent. Record high stock markets and a weaker yen also pressured bonds on Monday.
"The risk tone in general is driving rates, the markets have started the week deciding they like risk," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. US bonds are seen as safe-haven assets that benefit when investors are more risk averse. Treasuries are also trading based on technical levels as they hold within their recent range, said Goldberg.
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