Treasuries fall amid continued uncertainty over interest rate outlook

(RTTNews) – After initially showing a lack of direction, Treasuries turned lower during Monday’s trading day.

Bond prices came under pressure in morning trading and remained firmly negative throughout the afternoon. Subsequently, the yield on the benchmark 10-year note, which moves opposite to its price, climbed 5.8 basis points to 4.214%.

Treasuries extended the downward movement seen in the previous two sessions amid continued uncertainty about the interest rate outlook following last week’s Federal Reserve meeting.

The Fed statement raised hopes that the central bank would slow the pace of rate hikes in upcoming meetings, though the optimism was partly offset by hawkish comments from Fed Chairman Jerome Powell.

Traders were also anticipating the US midterm elections on Tuesday and the release of consumer price inflation data on Thursday.

The midterm elections will determine whether Democrats maintain control of Congress, while inflation data could impact the outlook for interest rates.

Economists expect the annual rate of consumer price growth to slow slightly, which could strengthen the case for a slower pace of rate hikes.

Amid another quiet day on the U.S. economic front, Tuesday’s trading could be hurt by the reaction to the results of the Treasury Department’s auction of $40 billion in three-year notes.

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