Treasury Prices Finish Little Changed

From Standard & Poor's Equity Research

MARKETSCOPE : Treasury prices finished little changed on Monday as investors watched comments from regional Fed presidents.

The benchmark 10-year note closed unchanged at 101-02/32 for a yield of 4.98%. The 30-year bond eased 01/32 to 91-10/32 for a yield of 5.07%.

Economic developments have made obsolete the Federal Reserve's two-year strategy of hiking interest rates at every meeting by a quarter-percentage point, said Janet Yellen, the president of the San Francisco Federal Reserve Bank on Monday, according to MarketWatch. She forecast that the economy will grow at a slower pace in coming quarters, which should ease inflation pressures. But Yellen said the Fed can't continue to hike rates until there are signs that inflation is slowing.

St. Louis Fed's Poole said August rate hike odds are 50-50. This compares to the 30% odds discounted by Fed funds futures. Poole said the Fed wants to do just enough to contain inflation, but no more, to ensure that policy is not "more draconian" than necessary.

News also hit that the U.S. Chicago Purchasing Managers Index rose to 57.9 in July, up from June's 56.5 reading.

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