FX.co ★ Treasury Yields Move Lower

The yield on the US 10-year Treasury note slipped to 4.21% on Monday, reversing earlier gains as risk sentiment improved ahead of a busy week for US economic releases. The data will help gauge the strength of the US economy and refine expectations for the Federal Reserve’s policy path, with particular focus on the delayed employment report, as well as CPI and retail sales figures.

Markets currently anticipate that the Fed will keep interest rates unchanged in March, with the first rate cut likely in June and another possible move in September. Supporting the more constructive tone, one-year-ahead inflation expectations in January fell to their lowest level in six months, while households also reported reduced concern about the labor market.

Earlier in the session, Treasury yields had risen after reports that Chinese regulators had urged domestic banks to reduce their holdings of US Treasuries, citing concentration risk and heightened market volatility.