February 13, 2017 / 8:11 PM / 10 months ago

TREASURIES-Yields rise as traders await Yellen testimony

(Adds quote, updates prices)
    * Yellen testifies to lawmakers on Tuesday and Wednesday
    * Stock market highs put pressure on bonds
    * Economic data this week includes inflation, retail sales

    By Karen Brettell
    NEW YORK, Feb 13 (Reuters) - U.S. Treasury yields rose on
Monday as investors looked ahead to testimony by Federal Reserve
Chair Janet Yellen on Tuesday and Wednesday and as record high
stock markets reduced demand for bonds.
    Investors will be watching for any new indications of when
the U.S. central bank will next raise rates when Yellen gives
her semiannual Humphrey Hawkins testimony before lawmakers in
    Investors reduced expectations of rate hike at the Fed's
March meeting after jobs data for January showed disappointing
wage growth.
    However, "if she says something hawkish, there's definitely
a reason to believe they could go in March," said Justin
Lederer, an interest rate strategist at Cantor Fitzgerald in New
    Benchmark 10-year notes fell 7/32 in price to
yield 2.43 percent, up from 2.41 percent late on Friday.
    Futures traders are currently pricing in an 18-percent
likelihood of a March rate hike, according to the CME Group's
FedWatch Tool.
    Fed Vice Chair Stanley Fischer said on Saturday that there
was significant uncertainty about U.S. fiscal policy under the
Trump administration, but the Fed would be strict in meeting
targets of creating full employment and getting inflation to 2
    Record high stock markets and a weaker yen also pressured
bonds on Monday. 
    "The risk tone in general is driving rates, the markets have
started the week deciding they like risk," said Gennadiy
Goldberg, an interest rate strategist at TD Securities in New
    U.S. bonds are seen as safe-haven assets that benefit when
investors are more risk averse.
    Treasuries are also trading based on technical levels as
they hold within their recent range, said Goldberg.
    Economic releases including inflation, manufacturing and
retail sales data are also in focus this week.

 (Editing by Nick Zieminski and Andrew Hay)

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