By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 21 U.S. Treasury debt yields edged
higher in rangebound trading on Tuesday ahead of a U.S. two-year
note auction, supported by generally improved market appetite
for risk as stocks and commodities gained.
"Yields have rallied quite sharply off the lows," said
Gennadiy Goldberg, interest rates strategist at TD Securities in
New York. "I see stocks have bounced very sharply, so this could
just be risk sentiment. But the market is rangebound, so all
these moves are happening within a tight range."
Benchmark U.S. 10-year and two-year Treasury note yields
rose after falling for two straight days.
Investors were also looking ahead to Wednesday's release of
the Federal Reserve's minutes of its latest meeting for clues on
the timing of the next interest rate hike. Fed Chair Janet
Yellen said last week that an increase would be considered at
every policy meeting, suggesting the U.S. central bank could
move next month.
"Our gut suggests that the Fed will want to keep jaw boning
the market to price in greater probabilities of hikes and makes
us lean somewhat hawkishly as a bias in terms of what to expect
from the Fed," said Ian Lyngen, head of U.S. rates strategy at
BMO Capital Markets.
In late morning trading, U.S. 10-year notes were
last down 2/32 in price to yield 2.432 percent, up from 2.425
percent on Friday.
U.S. 30-year bond prices slipped 5/32, yielding
3.039 percent, up from Friday's 3.031 percent.
U.S. two-year note prices were flat, yielding
Jim Vogel, interest rate strategist at FTN Financial, said
the U.S. two-year auction later in the session is set up for an
award of 1.255 percent, with only moderate response from
indirect bidders, mostly foreign central banks.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Dan Grebler)