U.S. Treasury yields fell Tuesday as investors assessed the outlook for the economy and monetary policy as they awaited economic data and comments from Federal Reserve officials.
The yield on the 10-year Treasury was last trading 9 basis points lower at 4.573%. The 2-year Treasury yield slipped 3 basis points to 4.911%.
Yields and prices move in opposite directions and one basis point equals 0.01%.
Treasurys
This week is light on the data front, but there will be comments from various Fed policymakers, including Chair Jerome Powell, this week.
"Policymakers can't afford to bounce between messaging depending purely on how bond yields are performing, especially when they are largely responsible for the moves, but they are clearly paying close attention to them," said Craig Erlam, senior market analyst at Oanda.
The Fed last week left interest rates unchanged while noting resilience from the economy despite rates being elevated for some time now. Powell did not rule out the potential for further interest rate increases and said cuts were not being discussed yet.
Jobs data published since has indicated that the labor market is cooling, giving some investors hope the central bank has reached the end of the rate-hiking cycle started in March 2022.
Easing the jobs market alongside the overall economy has been a central policy aim for the Fed. Investors will be scanning this week's comments from officials about whether the recent figures have affected their expectations for the policy path ahead.
Although bond yields have fallen in recent sessions, key upcoming data could play a pivotal role in the trajectory from here, said Societe Generale's Subadra Rajappa.
"We need to see a bit more of a trend of weakness in the data before we can call a sustained rally in bonds," said the head of U.S. rate strategy, although she expects a gradual decline as the U.S. economy likely enters a recession sometime in the middle of 2024.