U.S. Treasury Yields Edge Higher but Remain Subdued

U.S. Treasury bond yields leveled up on Monday, after falling below 1.3% last week, amid anticipation for economic data and more indicators that can reveal the progress on the road to recovery from the Coronavirus pandemic.

In addition, investors await the Federal Reserve Chairman Jerome Powell’s testimony before Congress on Wednesday and Thursday, looking for a reaction from the central bank chief to the changes in inflation and the outlook for interest rates and asset purchases.

Treasury yields are on a downward trend, which seems to have reversed the diminished risk appetite among some investors, who are now seeking bonds in emerging markets and high-yielding stocks, which pushed multiple exchange markets to new record highs.

The hawkish shift in tone by the U.S. Federal Reserve is the driving demand from investors for debt instruments.

Today, the benchmark 10-year Treasury bond yield remained near the range of the 1.37% level, compared with the high of 1.77% seen in March.

Last week, Treasury yields fell for a second consecutive week, amid increased demand for safe havens due to concerns about the Coronavirus pandemic and the spread of the Delta variant.

Earlier, New York Federal Reserve Bank President John Williams said that the Fed’s asset purchases are contributing to lower housing costs, noting that not only does the buying of mortgage-backed securities reflect on the housing market, but also so do the purchases of Treasury bonds and notes by the Fed, as both of them affect interest rates. Therefore, both of them affect the cost of housing.