US bond yields fall as investors await auctions and inflation data

By Chuck Mikolajczak

NEW YORK, Feb 7 (Reuters) – Yields on 10-year U.S. Treasuries fell on Monday, on a pause after last week’s jump on the strong January jobs report, and before they were released in new data on inflationary pressures.

* The yield had closed on Friday at its highest level since December 31, 2019 in the wake of a report that showed US non-farm payrolls rose 467,000 last month, well above analyst expectations of a new 150,000 posts.

* Yields have been on an upward trajectory as the Federal Reserve has signaled it will start raising interest rates this year and cut back on asset purchases to combat rising inflation.

* According to the CME FedWatch tool, market agents value the probability of a 25 basis point rise at more than 70% and that of a 50 basis point rise at almost 30% at the central bank’s March meeting.

* “Frankly, I don’t think the Fed can influence inflation that much in the short to medium term… The supply chain sorts itself out, simply because if the price is high someone will try to supply it,” Rich said. Familetti, chief investment officer of US Total Return Fixed Income.

* The yield on the 10-year Treasury note fell 1.4 basis points to 1.918%, after reaching 1.936% on Monday, its highest level since January 2, 2020.

* Treasury auctions of $51 billion in six-month bills and $60 billion in 3-month bills on Monday were strong, analysts said, with demand three times higher than supply.

* On Tuesday, the Treasury will hold an auction of $50 billion of three-year notes, with $37 billion of 10-year notes scheduled for Wednesday and $23 billion of 30-year bonds due to be sold on Thursday.

* The yield on the 30-year Treasury bond fell 1.2 basis points to 2.221%.

* The two-year bond yield, which typically moves with interest rate expectations, fell 2.6 basis points to 1.296%.

(Reporting by Chuck Mikolajczak. Editing in Spanish by Marion Giraldo)

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