U.S. Treasury prices rose on Wednesday, as Federal Reserve Chair Janet Yellen responded to questions after her speech before the House of Representatives in a second day of congressional testimony. Her remarks were very similar to the those given yesterday to a Senate committee.
Prices on benchmark 10-year Treasury notes—used to calculate mortgage rates and other consumer loans—rose 3/32 to yield 2.54 percent, down from 2.56 percent earlier in the morning. The 30-year bond rose 12/32 in price to yield 3.36 percent. The 2-year note was slightly lower in price to yield 0.49 percent.
During the previous session, Yellen reiterated that the Fed's loose monetary policy remained appropriate as the economic recovery was still incomplete.
Once again, she acknowledged that credit markets were at risk of overheating because of ultra-accommodative policy, and singled out high yield debt and leveraged loans as particular concerns. She also expressed worries about stretched valuations in equity markets, especially the social media and biotech sector.
I remarks to the University of Southern California, Dallas Fed President Richard Fisher said the Fed "may well'' raise rates in early 2015, adding that the hikes will most likely come in gradual increments.
U.S. data released in the morning showed higher than expected producer price index, positive home builder sentiment and slightly higher industrial production figures. Later on Wednesday, the Fed is expected to release its latest Beige Book, a report on the economy.