Treasuries Move Modestly Higher, Extending Upward Trend

Extending the upward trend seen over the past several sessions, treasuries moved modestly higher during trading on Tuesday.

Bond prices gave back some ground after an early advance but remained in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.6 basis points to 4.463 percent.

The ten-year yield closed lower for the fifth consecutive session, ending the day at its lowest closing level in almost a month.

The continued upward move by treasuries came amid renewed optimism about the outlook for interest rates.

Relatively dovish comments from Federal Reserve Chair Jerome Powell combined with weaker-than-expected job growth in April have largely eliminated short-lived concerns the Fed might actually consider raising rates.

Investors have instead grown increasingly confident about a rate cut in the coming months, with the chances rates will be lower by September now at 81.5 percent, according to CME Group's FedWatch Tool.

However, bond prices gave back ground in afternoon trading after Minneapolis Federal Reserve President Neel Kashkari suggested interest rates may need to remain at current levels for an "extended period."

"I would need to see multiple positive inflation readings suggesting that the disinflation process is on track" before cutting rates, Kashkari said before the Milken Institute 2024 Global Conference.

Kashkari also said he could not rule out the Fed once again raising rates, calling the bar for hiking rates "quite high" but "not infinite."

Looking ahead, the Treasury is due to announce the results of this month's auctions of $42 billion worth of ten-year notes on Wednesday.

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