NEW YORK- Treasury yields edged higher on Tuesday as the market awaits the release next week of consumer price data followed by a Federal Reserve meeting in which futures traders expect policymakers to pause their aggressive hiking of interest rates.
The two-year Treasury yield, which typically moves in step with interest rate expectations, rose 3.3 basis points to 4.516 percent, while the yield on 10-year notes unchanged to 3.693 percent.
The Reserve Bank of Australia earlier on Tuesday raised rates by a quarter-point to an 11-year high of 4.1 percent. The Australian central bank warned that further tightening may be required to ensure that inflation returns to target.
The Bank of Canada meets on Wednesday, and if it pauses that increases the likelihood the Fed does too a week later, said Thierry Wizman, global FX & interest rates strategist at Macquarie in New York.
“You might want to infer a little bit about what the Fed might do, but not too much, especially if they hike,” he said.
The RBA move was a bit surprising but with US debt ceiling worries out of the way, people in the US are focused more on next week than this week.
The Labor Department will release the Consumer Price Index (CPI) for May on June 13, a day before the Fed is seen keeping its target rate unchanged at 5 percent-5.25 percent – the first time since March 2022 that the US central bank does not raise rates.
