Investors have priced in a near-certainty that the Fed would raise benchmark rates by 25 basis points at the end of its meeting on Wednesday, the smallest increase since the central bank began its rate-hike cycle 10 months ago.
Economic data scheduled to be released this week, which includes readings on consumer confidence, construction spending, and unemployment, are expected to factor into whether the Fed will conclude its rate hikes in March.
"We anticipate the price action itself will be the most relevant takeaway from the session as investors seek to setup for this week's array of fundamental and policy developments," said Ian Lyngen, head of U.S. Rates Strategy at BMO Capital Markets.
The yield on 10-year Treasury notes was up 3.5 basis points to 3.553%, bringing it close to its highest level since Jan. 11.
The yield on the 30-year Treasury bond was up 2.8 basis points to 3.662%.
Rising concerns about the possibility of a default if
Congress does not raise the debt ceiling helped propel greater
demand for 6-month bills than for 3-month bills in separate
auctions held Monday, said Thomas Simons, money market economist
at Jefferies LLC.
"It is possible that the buyside is steering clear of
the 3-month because of an expected paydown in bills that will be
ongoing when this bill matures," he said.
A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes , seen as an indicator of economic
expectations, was at -70.6 basis points.
The two-year U.S. Treasury yield, which
typically moves in step with interest rate expectations, was up
5 basis points at 4.257%.
January 30 Monday 1:21PM New York / 1821 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 4.5525 4.6665 -0.010
Six-month bills 4.63 4.8037 -0.035
Two-year note 99-193/256 4.2547 0.048
Three-year note 99-194/256 3.9621 0.054
Five-year note 99-48/256 3.6794 0.058
Seven-year note 99-60/256 3.6248 0.046
10-year note 104-176/256 3.5532 0.035
20-year bond 102-224/256 3.7918 0.027
30-year bond 106-24/256 3.662 0.028
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 27.75 -0.25
spread
U.S. 3-year dollar swap 14.75 0.50
spread
U.S. 5-year dollar swap 5.75 -0.25
spread
U.S. 10-year dollar swap -2.00 0.25
spread
U.S. 30-year dollar swap -37.50 0.00
spread
(Reporting by David Randall; Editing by Arun Koyyur and Andrea
Ricci)
