US Treasury yields started the week higher, with the 10-year yield rising slightly to 1.66% on Monday morning.
The benchmark 10-year Treasury note yield rose to 1.662% at 4:50 a.m. ET. The yield on the 30-year government bond rose to 2.367%. The returns move inversely to the prices.
Government bond yields have soared recently on concerns about possible inflation growth amid the economic recovery from the coronavirus pandemic. However, data on the price index for personal consumption expenditure released on Friday showed subdued price inflation in February.
The PCE core price index rose 1.4% in the twelve months to February after rising to 1.5% in January.
Ben Jones, chief strategist at State Street Global Advisors, told CNBC’s “Squawk Box Europe” Monday that inflationary pressures concerns remain the “main story for the coming months” and that the bond market is “testing” the resolve of the (Federal Reserve). “
Fed chairman Jerome Powell said earlier this month that the central bank expected inflation to rise this year, but said that “temporary surge” would not be enough to adjust Fed policy.
“Personally, I wouldn’t bet against the Fed,” Jones said, agreeing that while inflation would rise in the summer when economies reopen, it would “drift past the back end of a bit down.” this year.”
However, Jones did not believe inflation would return to “bottom” as both households and businesses saved money to spend after the pandemic. Hence, he believed that inflation would be “slightly higher” than in recent years, but not “widespread”.
Investors will be on the lookout for updates to President Joe Biden’s infrastructure plan, which could cost north of $ 3 trillion. The president is expected to reveal his plan when he travels to Pittsburgh on Wednesday.
Fed Governor Christopher Waller will deliver a speech on the independence of the US Federal Reserve Peterson Institute for international economic discussions on Monday at 11:00 a.m.CET.
Auctions will be held Monday for 13-week bills worth $ 57 billion and 26-week bills worth $ 54 billion.
– CNBC’s Yun Li contributed to this report.
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