NEW YORK- Longer-dated US Treasury yields inched higher on Monday as investors awaited upcoming inflation data and a policy announcement from the Federal Reserve in the coming days.
The consumer price index (CPI) for May is expected on Tuesday to show a slowing rise in inflation on a year-over-year basis to 4.1 percent from the April reading of 4.9 percent, according to economists polled by Reuters, with a monthly increase of 0.2 percent, down from a 0.4 percent rise the prior month.
The CPI data along with the producer price index (PPI), due on Wednesday, could influence expectations for the Fed’s policy announcement Wednesday afternoon.
The Fed is currently expected to deliver a “hawkish pause” at its policy announcement, taking a break from its string of rate hikes while cautioning that more hikes could be necessary should inflation remain stubbornly high. The central bank is also due to release its summary of economic projections (SEP) for the first time since its March meeting.
“Right now, the market is probably going to move sideways until you get the inflationary data tomorrow and then all eyes will be on the Fed, because you also get the summary of economic projections too,” said Jim Barnes, director of fixed income at Bryn Mawr Trust in Berwyn, Pennsylvania.
“The Fed has been a little more aggressive than what the market is pricing in, and now the market has kind of gone back to where the Fed is, so that summary of economic projections becomes more compelling to see what the forecast is for the end of this year and for the end of next year.”
The yield on the benchmark 10-year Treasury notes was up 0.6 basis point at 3.751 percent.
