by Gertrude Chavez-Dreyfus
Nuevanew yorkJan. 24 – Most U.S. Treasury yields edged lower in a volatile session on Tuesday as investors await next week’s Federal Reserve policy meeting, which is expected to announce an interest rate hike of 25 basis points.
* Bond yields rose in the first session and 10-year and 2-year bond yields hit one-week highs, buoyed by data showing a slowdown in the US manufacturing and services sector this month.
* US business activity contracted for a seventh straight month in January, although both the manufacturing and services sectors eased into recession for the first time since September, while business confidence strengthened at the start of the new year.
* At the same time, an S&P Global survey released Tuesday showed increased pressure on prices for the first time since last spring, indicating inflation is far from over, despite aggressive measures by the Federal Reserve to control it.
* The report should reinforce expectations that the Fed is likely to tighten rates again next week, but at a slower pace.
* “I expect a hike of 25 basis points in February and then 25 points in March and then the Fed will halt the cycle for the rest of the year,” said Tom Di Galloma, managing director of global rates. btig in New York.
* By late morning, the yield on the 10-year Treasury note was down 1.5 basis points at 3.508%. The yield on 30-year securities fell 2.3 basis points to 3.667%.
* A closely watched stretch of the yield curve, which measures the difference between the yields on two-year and 10-year Treasury notes, showed a sharp inversion at -72.8 basis points.
