U.S. Treasury yields moved modestly higher on Monday, as investors turned their focus to inflation data and a Senate testimony by Federal Reserve Chairman Jerome Powell.
The yield on the benchmark 10-year Treasury note added less than a basis point, rising to 1.78% in afternoon trading after breaching 1.8% earlier in the day. The yield on the 30-year Treasury bond was flat near 2.115%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
The moves on Monday continued sharp climb for yields after the 10-year ended 2021 at 1.51%.
“We could see the next spot where we really see some resistance just at the flat point of 2%. That’s kind of what we’re looking for, over the next couple of months, to ease our way up to 2%,” said John Luke Tyner, a portfolio analyst at Aptus Capital Advisors.
Powell’s nomination hearing in the Senate is scheduled for 10 a.m. ET on Tuesday. The hearing for Fed Governor Lael Brainard’s nomination to the post of vice chair of the central bank is due to take place at 10 a.m. ET on Thursday.
The December consumer price index is due out at 8:30 a.m. ET on Wednesday, and last month’s producer price index slated for 8:30 a.m. ET on Thursday. Higher inflation readings might prompt the Fed to raise interest rates early.
Stephen Isaacs, chairman of the investment committee at Alvine Capital, told CNBC’s “Squawk Box Europe” on Monday that the Fed has been “hopelessly behind the curve” in its movements on monetary policy.
He said that “people were mystified that the Fed seemed to do an enormous pivot but it’s pretty simple: Powell was waiting to get his job confirmed.”
Isaacs said that forecasts of three or four interest rate raises in 2022, followed by a further three hikes in 2023, would likely see the federal funds rate reach 2%. Isaacs expected the 10-year Treasury yield to then hit as high as 3%, which he believed could help manage inflation but didn’t think this would “restrain growth.”
There are no major data releases scheduled for Monday.
Auctions are set to be held on Monday for $60 billion of 13-week bills and $51 billion of 26-week bills.
