U.S. Treasury yields dipped slightly Monday as investors braced for the latest Federal Reserve policy meeting.
The yield on the benchmark 10-year Treasury note ebbed 1.2 basis points lower to 1.735 at 7:08 a.m. ET. The yield on the 30-year Treasury bond fell by 1.2 basis points to 2.05%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
The Fed’s January two-day policy meeting is due to start on Tuesday. Investors will be looking for any clues as to how much the central bank will raise interest rates this year and when it will start.
Goldman Sachs said Sunday that its baseline forecast calls for four rate hikes this year, but the bank sees a risk for more rate increases due to the surge in inflation.
Holger Schmieding, chief economist at Berenberg, told CNBC’s “Squawk Box Europe” that the investment bank also expected there to be four rate hikes, of 25 basis points, this year.
However, Schmieding added that Berenberg believed there was a “risk it might be five, but against the backdrop of a very strong nominal and real demand in the U.S.”
“Even these rate hikes would merely sort of dampen a bit the very strong momentum in the U.S. economy but they would not derail the U.S. economic upswing,” he said.
Markit is due to release its flash purchasing managers’ index at 9:45 a.m. ET on Monday.
Auctions are scheduled to be held on Monday for $60 billion of 13-week bills, $51 billion of 26-week bills and $54 billion of two-year notes.
— CNBC’s Yun Li contributed to this market report.
