By Gertrude Chavez-Dreyfuss
NEW YORK Feb 11 U.S. Treasuries slid on Tuesday
after Federal Reserve Chair Janet Yellen said she strongly
supported the Fed's monetary policy strategy, suggesting the
central bank's current reduction in asset purchases was on
Yields on the 10-year note climbed to 2.71 percent from
around 2.68 percent, but still remain within the 2.724-2.636
percent range hit after a softer-than-expected U.S. non-farm
payrolls report last Friday.
In prepared remarks released ahead of her appearance in
Congress, Yellen said she expected to continue trimming stimulus
in measured steps due to broader improvements in the economy.
"If you split hairs, maybe there were some who were hoping
for a pause in tapering. But frankly, we weren't expecting
that," said Mike Cullinane, head of Treasuries trading, at D.A.
Davidson, in St. Petersburg, Florida.
"We would need a really bad (payroll) print to change
course. We will likely see a revisit to 2.80 percent on the
10-year note rather than a further rally toward 2.50 percent."
Benchmark 10-year Treasuries were last down
10/32 in price to yield 2.71 percent, while 30-year bonds
fell 11/32 to yield 3.68 percent.
Five-year notes were down 7/32 in price to yield
1.52 percent, while seven-year notes were 9/32 lower
with a yield of 2.17 percent.
Yellen acknowledged some weakness in the U.S. labor market
and made reference to volatility in global financial markets,
but said at this stage it did "not pose a substantial risk to
the U.S. economic outlook."
"The Fed is not waving any panic banner related to either
emerging markets or some of the soft jobs numbers that are
coming out," said Michael Temple, senior vice president at
Pioneer investments in Boston.
Later in the session, the Treasury will auction $30 billion
in three-year notes, which is expected to have solid demand.