U.S. Treasury yields fell slightly on Tuesday as investors awaited new inflation data and focused on comments from Federal Reserve policymakers.
As of 4:45 a.m. ET, the 10-year Treasury yield fell less than 1 basis point to 4.4747%. The two-year bond yield was last at 4.8400% after falling more than 1 basis point.
Yield and price have an inverse relationship. 1 basis point equals 0.01%.
Investors focused on the latest important economic data and comments from Federal Reserve officials, looking for hints about the future direction of monetary policy.
The April producer price index, which tracks inflation at the wholesale level, will be released on Tuesday. Economists polled by Dow Jones expect the PPI to rise 0.3% from last month.
This is the first of two major inflation reports expected this week, with the consumer price index for April expected to be released on Wednesday. Economists expect sales to rise 3.4% from a year ago, reflecting a 0.4% increase on a monthly basis, according to a Dow Jones survey.
This comes after the Fed said at its last meeting that it saw “no further progress” in returning inflation to its 2% target. Policymakers have also repeatedly said they want evidence in the data that inflation pressures are easing before they feel ready to cut rates.
Therefore, this data could influence investors' expectations about when rate cuts will occur and how many rate cuts will occur this year. If the CPI and PPI signal slowing inflation, expectations for rate cuts may increase, and vice versa.
Other Fed officials, including Chairman Jerome Powell, are also scheduled to speak this week, potentially providing new insight into the outlook for monetary policy.