NEW YORK- Treasury yields edged lower on Tuesday after a poorly received auction of 10-year inflation-protected notes and minutes from the Federal Reserve’s meeting three weeks ago did not reveal any new policy decisions.
Policymakers agreed at their Oct. 31-Nov. 1 meeting that they could take a cautious approach whether to raise US interest rates further and would only move them higher “if” new information showed insufficient progress in curbing inflation.
The minutes showed US central bank policymakers wrestled with conflicting economic signals at a meeting where they left the Fed’s benchmark overnight interest rate unchanged at the current range of 5.25 percent -5.50 percent .
“There were no new policy decisions in the minutes,” said Kim Rupert, managing director of global fixed income at Action Economics in San Francisco. “The dollar strengthened a bit and Treasuries barely moved” after the minutes were released.
The two-year Treasury yield, which reflects interest rate expectations, fell 3 basis points to 4.881 percent , while the yield on the benchmark 10-year note fell 1.2 basis points at 4.410 percent .
Earlier, the sale of $15 billion in 10-year Treasury Inflation-Protectes Securities, or TIPS, drew tepid interest from investors seeking lower prices, which pushed their yield higher at an auction Rupert called “a bit disappointing.”
Bonds yields move inversely to their price.
“It’s hard to tell whether it was just holiday-shortened trading or investors don’t really see the need for inflation protection,” she said.
Prices on 10-year TIPS fallen slightly prior to the auction, “but still it wasn’t cheap enough to really attract good participation,” Rupert said. – Reuters
