By Matt Tracy
WASHINGTON, Feb 13 (Reuters) – The yield on 10-year U.S. Treasury bonds rose to its highest level in six weeks on Monday as markets awaited the latest inflation data and a possible tightening of monetary policy in the US. fed.
* The 10-year paper yield hit 3.755% on Monday, the highest level since Jan. 6. For its part, the yield on two-year debt reached 4.560%, its highest level since the end of November. * Yields have continued to rise since the release of better-than-expected jobs data earlier this month, which showed employers added 517,000 jobs in January. The unemployment rate hit 3.4%, its lowest level in 53 years.
* This prompted many investors to recalibrate the odds of the Fed raising its interest rate past the widely expected high of 5.00-5.25% ahead of the jobs data.
* “There is a momentum where technical (investors) are going to want to buy, and fundamental (investors) are clearly saying that we are going to keep selling, at least until we get more data,” said John Madziyire , portfolio manager. and Head of Bonds and Inflation for Vanguard’s Fixed Income Group.
* Addressing jobs data last week, Fed Chairman Jerome Powell left the door open for a benchmark rate hike beyond 5.00-5.25%.
* Markets are now awaiting the release of the latest consumer price index data on Tuesday. Economists polled by Reuters expect headline and core CPI to rise 0.4% month on month in January.
* Following the CPI report, the US Census Bureau will release its January retail sales report on Wednesday, another data closely watched by the Fed and the markets. Retail sales are expected to rebound 1.6% in January after falling 1.1% in December, according to a Reuters poll of economists.
* The yield curve between two-year and 10-year bonds inverted at -83 basis points, after hitting -88 basis points last week, the highest since Dec. 13. The deep inversion in this part of the yield curve indicates concern about an impending recession. (Reporting by Matt Tracy; Editing in Spanish by Javier Leira)