US Treasuries prices were little changed on Monday ahead of a busy calendar of speeches from several Federal Reserve officials and key economic data expected during the week. Top Fed officials including Chair Janet Yellen will speak this week, as investors await possible clues about the scheduled December 16-17 Federal Open Market Committee meeting.
"While the Fed speakers won't explicitly say that they'll raise rates in December, we'll be looking for commentary that continues to suggest lift-off is in December," said Tom Simons, money market strategist at Jefferies & Co in New York. Purchases of longer-dated Treasuries to meet expected month-end and year-end changes to portfolio benchmarks pushed longer-dated bond prices slightly higher, continuing to flatten the yield curve, analysts said.
Long-dated yields could continue to outperform once the Fed raises rates, in anticipation of higher Fed rates and still-low inflation figures. Monday's data was weak. The Chicago Purchasing Management Index fell in November, indicating a contraction in the Midwest factory sector. The data supported buying in Treasuries, with longer-dated maturities outperforming shorter-dated ones.
Economists expect Friday's employment report to show employers added 200,000 jobs in November, according to a Reuters poll. Evidence of further improvement in the US labour market would reinforce expectations that the Fed will raise interest rates in December. Other US data expected during the week includes manufacturing and auto sales data for November. In addition to economic data and Fed speakers, investors will be watching the European Central Bank's meeting on Thursday to see if the bank will begin cutting interest rates.
"This is a very important meeting because it's the last of the year and if rates are cut further into negative territory, it will have ripple effects into the US market," said Stanley Sun, interest rates strategist at Nomura Securities International in New York. Benchmark 10-year Treasuries rose 3/32 in price to yield 2.214 percent, down from 2.222 on late Friday. The 30-year bond was up 13/32 in price to yield 2.980 percent. Several Fed officials besides Yellen speak this week, including Fed Vice Chair Stanley Fischer and New York Fed President William Dudley.