NEW YORK- US Treasury yields ticked higher on Monday as investors likely sold government bonds to buy new corporate debt, while Federal Reserve officials pointed to uncertainty over the central bank’s ability to cut interest rates if inflation remains sticky.
Investors largely expected a period of consolidation in Treasuries after softening consumer prices last month strengthened views that the Federal Reserve may be able to cut interest rates twice this year.
Yields, which move inversely to prices, have mostly declined over the past few weeks on indications that the economy was slowing, partly reversing months of gains caused by fears that inflation was rebounding.
Monday’s yield increases were a sign the market was “trying to find a balance” after the recent bond rally, said Danny Zaid, a portfolio manager at TwentyFour Asset Management, who expects Treasuries to be less volatile over the next few weeks.
The ICE BofA MOVE Index, a measure of expected volatility in US Treasuries, stood at its lowest since the end of March.
“It’s very quiet … I think the selling probably has more to do with new issue deals announced this morning,” said Tony Farren, managing director at Mischler Financial Group, referring to a slate of new corporate bond sales announced on Monday.
