MW: Treasurys fall as market awaits fresh data signal
By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) — Treasury prices inched lower Monday, pushing yields higher as investors wait for fresh signals about the pace of the economic recovery to help guide expectations of the Federal Reserve’s monetary policy.
The 10-year note 10_YEAR +0.76% yield climbed 2 basis points to 2.643%, extending a rise from its lowest level since February, which the benchmark yield touched on May 7. The 30-year bond 30_YEAR +0.23% yield rose 1 basis point to 3.477%, and the 5-year note 5_YEAR +1.35% yield advanced 2.5 basis points to 1.650%.
U.S. bond investors are looking ahead to a Tuesday report on retail sales, a Wednesday producer-price indicator, and a Thursday consumer-price index reading. That data may help the market get a sense of whether labor conditions and inflation are improving enough to warrant the Federal Reserve to begin tightening its policies next year.
Bond investors are looking for data that will help them ascertain when the central bank can be expected to begin hiking its key lending rate, which would send yields higher. But recent data has been skewed by a cold winter in much of the U.S., which has been blamed for a slowdown in economic activity.
U.S. Treasurys had been rallying in recent sessions, led by strength in long-term bonds. However, a weak auction of 30-year bonds Thursday undermined the run higher in prices, turning the market lower in recent sessions.
“With developments over the weekend limited on the geopolitical front and no compelling data to shift broader economic expectations, the market was left to drift lower as we await this week’s series of economic releases,” said Ian Lyngen, senior rates strategist at CRT Capital Group, in a note to clients.
Overnight, China released an early version of its new capital-market reforms, which sent stocks surging. In Europe, some European Central Bank leaders said that medium-term inflation expectations will determine whether the European Central Bank takes further easing measures, already largely expected by market participants.
Investors mostly shrugged off potential escalation of the conflict in Ukraine, as pro-Russian separatists declared victory in a referendum vote over whether the eastern portion of Ukraine should break off from the nation.
