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Home>BOND REPORT: Treasury Yields Remain Higher As Yellen Reiterates Case For Rate Rise

BOND REPORT: Treasury Yields Remain Higher As Yellen Reiterates Case For Rate Rise

BOND REPORT: Treasury Yields Remain Higher As Yellen Reiterates Case For Rate Rise

09/27/2017

By Mark DeCambre and William Watts, MarketWatch

Janet Yellen says the Fed should be wary of 'moving too gradually'

U.S. Treasury prices declined slightly Tuesday, nudging yields up, as Federal Reserve Chairwoman Janet Yellen reiterated the case for further rate increases despite inflation running below the central bank's target.

On Monday, yields had fallen as escalating tensions sparked by a flare-up in aggressive rhetoric between the U.S. and North Korea inspired some buying of so-called haven assets, including gold futures and government paper.

The benchmark 10-year Treasury yield rose less than a basis point to 2.229%, while the 2-year Treasury note yield rose 1.5 basis points to 1.44%. The 30-year bond yield added 1.2 basis points to 2.771%.

Bond prices and yields move in opposite directions.

Yellen, in a speech in Cleveland, said the Fed should be wary of "moving too gradually" (http://www.marketwatch.com/story/yellen-says-fed-should-be-wary-of-raising-rates-too-gradually-2017-09-26) due to risks that the labor market could overheat, resulting in inflation and prices rising too rapidly.

"In short, Dr. Yellen offered nothing to suggest that she sees any reason to delay raising rates until next year, though she was cautious, as usual, to avoid offering hostages to fortune," said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note.

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