Treasury traders have gotten over the jolt from Federal Reserve Chair Janet Yellen’s suggestion in March that the central bank may raise U.S. interest rates as soon as the middle of next year.
Two-year note yields are below where they were on March 19, when Yellen spoke. While the comment sent short-term rates up that month, they moved back down in May as Yellen emphasized the economy isn’t meeting the Fed’s goals. Minutes from the Fed’s April meeting to be released today may show discussion about factors to be used in deciding when to raise the benchmark federal funds rate.
“It will take a much stronger growth path to convince people we’ll someday have higher rates,” said Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Securities USA Inc.
Shorter-term Treasuries were little changed today, with two-year yields at 0.35 percent at 10:59 a.m. New York time, according to Bloomberg Bond Trader data. The rate touched 0.32 percent yesterday, the lowest since March 14. The price of the 0.375 percent security due in April 2016 was 100 2/32.
Benchmark 10-year note yields rose three basis points, or 0.03 percentage point, to 2.54 percent after falling on May 15 to 2.47 percent, the lowest since October. They touched 2.66 percent on March 19, and have averaged 2.72 percent this year.