Treasury Prices Up

Political tensions between the U.S. and Iran intensified

MARKETSCOPE : Treasury bond prices rose on Monday, after their steep sell-off Friday.

The benchmark 10-year note edged up 03/32 on the day to 96-13/32 for a yield of 4.97%, while the 30-year bond rose 08/32 to 91-24/32 for a yield of 5.04%.

Investors fled for safety as saber rattling intensified between the U.S. and Iran. The Pentagon is reportedly preparing tactical military attacks against Tehran; the news prompted a surge in energy prices. The U.S. has protested for months against Iran's plans for a nuclear program.

Fed Governor Olson gave indications the Fed will continue to raise rates at least once more. He said the March payrolls report on Friday was an "indication of a pretty strong underlying economy," but it is "hard to know" whether the economy can sustain jobs growth without increasing inflationary pressure.

Fed Governor Bies said short-term rates are closer to the level the Fed views as appropriate relative to inflation. She also noted inflation has been better behaved than some had feared at the Fed. But she added that just how much further the Fed will go on rates is "not a slam-dunk," as such judgments are becoming more of a meeting to meeting issue.

The Federal Open Market Committee meets again on May 10, when it could move on rates. The federal funds rate already stands at 4.75%. The Federal Open Market committee has performed a series of hikes in recent years in an effort to control inflation.

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