|
NEW YORK (CNN/Money) -
Treasuries pared earlier gains Tuesday after Fed officials warned about inflation, cementing expectations of further short-term interest rate hikes.
The benchmark 10-year Treasury note added 3/32 of a point to 99 to yield 4.37 percent, down from 4.39 late Monday.
The 30-year bond gained 11/32 of a point to 111-15/32 to yield 4.6 percent, down from 4.63 the previous session. Bond prices and yields move in opposite directions.
In shorter-dated debt, the five-year note rose one tick to yield 4.23 percent, while the two-year note was unchanged, yielding 4.19 percent.
Treasury prices made modest gains early Tuesday as oil prices fell. U.S. light crude for November delivery sank as much as $2 before recovering to settle down $1.57 at $63.90 a barrel on the New York Mercantile Exchange.
But bonds lost momentum after top Fed officials spoke about inflationary pressures, leading traders to believe a pause in the Fed's measured pace of interest rate hikes was unlikely.
Dallas Fed President Richard Fisher said the U.S. central bank needed to be vigilant on inflation and warned that inflation was running at the "upper end of the Fed's tolerance zone."
St. Louis Fed President William Poole said policymakers cannot be locked into long-term policy decisions but instead must remain ready to react to surprises, especially on inflation.
The hawkish comments echoed recent statements made by Fed members, such as those of Atlanta Fed President Jack Guynn, who said Monday that inflation is a risk and that the Fed's 15-month interest-rate hike campaign still has "a ways to go" before completion.
"If you look at all the speakers after the last Fed meeting, they've all held to the same line: Inflation is running on the higher side of where they're comfortable, and the growth effects from the hurricanes will be temporary," Adam Brown, co-head of U.S. Treasury trading at Barclays Capital, told Reuters.
Inflation hurts bonds, as it erodes the value of the fixed interest-paying investment.
In currency trading, the dollar was mixed against the euro and yen.
The euro traded at $1.1923, up from $1.1916 late Monday, while the dollar bought ¥114.17, up slightly from ¥114.14 the previous session.
The dollar has gained recently by expectations the Fed would continue to raise interest rates, which make dollar-denominated investments more attractive to foreign investors.
-- from staff and wire reports
________________
For updated bond charts click here.
Oil producers reinvesting in U.S.? Click here.
|
