Expectation of yields rising on Japanese bonds

In Japan on Monday, the yield on 10-year government bonds lost 2.5 basis points to yield 1.180 percent, a 22-month low.

Prices rose with a significant drop in the Nikkei 225, which hit a 2-week low.

Some experts, however, think that yields could start rising again when new economic data that is expected to show a strengthening of the economy is released this week.

Meanwhile in the United States, investors were hesitant to trade in US Treasury bonds before a 2-day meeting of the US Federal Reserve that is scheduled to begin on Tuesday.

It is expected that the Fed will raise the interest rate a quarter of a point to 3.25 percent during the meeting.

Yields on 2-year Treasuries were up 0.9 basis points to yield 3.588 percent, but yields fell and prices were up on longer-dated bonds. 10-year issue bonds fell 1.7 basis points to yield 3.902 percent, and 30-year bonds were down 3 basis points to a yield of 4.193 percent.

A tightening supply of government bonds was one factor in the higher prices for longer-term issues, as the Treasury announced that it would sell $20 billion worth of 3-year bonds on Tuesday. This is down from $22 billion in May and $24 billion in April.

In addition, the Treasury is expected to announce in August whether or not it will once again begin to issue 30-year bonds. It stopped issuing 30-year bonds in 2001.

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