Treasuries rose for the first time in four days as traders speculated Federal Reserve Chair Janet Yellen will emphasize weakness in the U.S. labor market in her speech tomorrow at a conference of central bankers.
The yield curve, the difference between five- and 30-year U.S. debt yields, flattened to the lowest level in three weeks. Yellen has cited labor-market slack as a reason for low interest rates. The Federal Open Market Committee debated the issue last month, and “many” policy makers said they may raise rates sooner than they anticipated, meeting minutes showed yesterday. The U.S. sold $16 billion of five-year inflation-linked notes.
“People are looking for Yellen to temper a lot of the disappointment of the FOMC,” said Aaron Kohli, an interest-rate strategist at BNP Paribas SA in New York, one of 22 primary dealers that trade with the Fed. “They’re expecting something that’s much more soothing for bond bulls.”