By Gertrude Chavez-Dreyfuss
NEW YORK, Sept 7 U.S. Treasury yields fell for a
second straight session on Wednesday, with two-year and ten-year
notes falling to three-week lows as investors tempered
expectations the Federal Reserve will raise interest rates later
this month after a round of mostly weak economic data.
U.S. 30-year bond yields, which move inversely to prices,
also dropped to a four-week low, while yields slid to three-week
troughs for the intermediate sector, the five- and seven-year
A softer-than-forecast U.S. non-farm payrolls report for
August and a modest expansion in the U.S. services sector last
month prompted a round of U.S. Treasury debt buying as market
participants started to price out a rate hike.
Mixed comments from San Francisco Fed President John
Williams overnight did not alter expectations for the Federal
Open Market Committee meeting Sept. 20-21. Williams, who is not
a Fed voter this year, said he prefers a rate sooner rather than
later, but will not necessarily advocate for tightening in the
Fed funds futures prices on Wednesday indicated that
investors see just a 15 percent chance of a rate hike at the Fed
meeting, unchanged from Tuesday.
The perceived likelihood of a December rate increase,
however, was just 46 percent, versus 50.8 percent the day
"Should the data heading into the Fed take September off the
table completely, it's very likely the market will push December
back as well," said Aaron Kohli, interest rate strategist at BMO
Capital Markets in New York.
In mid-morning New York trading, benchmark 10-year Treasury
notes were up 3/32 in price to yield 1.528 percent,
from 1.543 percent on Tuesday. Yields fell as low as 1.519
percent, a three-week trough.
The 30-year Treasury bond rose 15/32 in price to
yield 2.218 percent, from 2.240 percent late Tuesday. Earlier,
yields slid to a four-week low of 2.206 percent.
Prices of two-year notes were flat with a yield
of 0.734 percent.
(Editing by Jeffrey Benkoe)