The 10-year U.S. Treasury yield inched lower on Monday as the focus shifted to the Federal Reserve meeting scheduled for this week, which could provide clues about what could happen to interest rates in the coming months.
The yield on the 10-year Treasury was down by more than 1 basis point at 4.309%. The 2-year Treasury yield was last trading almost 3 basis points higher at 5.062%.
Yields and prices move in opposite directions. One basis point equals 0.01%.
Treasurys
As well as the latest interest rate decision, investors will be looking for guidance on the outlook for monetary policy from the central bank.
Markets are pricing in a 99% chance that the Fed will keep rates unchanged this week, according to CME's FedWatch tool, which gauges pricing in fed funds futures.
However, rates going higher later in the year is still a possibility that Fed officials have not taken off the table in recent weeks. Many cited economic data, especially regarding inflation, as a key factor in their decision-making.
Both the consumer price index and producer price index for August were released last week, indicating that inflationary pressures may be easing, especially when excluding volatile food and energy prices for core CPI and core PPI figures.
Core consumer inflation came in at 0.3% on a monthly basis and 4.3% from a year ago, with the monthly rise being 0.1% ahead of expectations and the annual increase being in line with estimates. Meanwhile, the core-PPI was in line with estimates at 0.2%.
The figures were followed by the University of Michigan's consumer sentiment report on Friday, which reflected a significant decline of inflation expectations.