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Bonds News

TREASURIES-Yields rise on hawkish Fed comments, corporate supply

* Lacker, Williams see improving inflation

* Investors prepare for corporate debt issuance

* Low trading volumes seen exaggerating price moves

NEW YORK, March 21 (Reuters) - U.S. Treasury yields rose on Monday after two Federal Reserve officials gave bullish projections on inflation and as investors prepared for new corporate debt sales.

Richmond Fed President Jeffrey Lacker said inflation was likely to accelerate in coming years and move toward the Federal Reserve’s 2 percent target.

San Francisco Fed President John Williams told Market News International that he would advocate for another interest rate hike as early as the April meeting, noting “very encouraging” progress in inflation.

“There were some hawkish comments from a couple of Fed officials, on the margin pointing to the potential for the Fed to continue with their new path of normalization,” said Ian Lyngen, senior government bond strategist at CRT Capital in Stamford, Connecticut.

Yields had fallen since the Fed gave a more dovish-than-expected outlook on the economy on Wednesday, noting that the United States continued to face risks from an uncertain global economy even as fresh projections from policymakers showed they expected two quarter-point rate hikes by year’s end.

Investors and dealers preparing for new corporate debt issuance added to Treasuries’ weakness on Monday, although low trading volumes and the absence of any major economic data was seen as exaggerating price moves.

Benchmark 10-year notes were last down 13/32 in price to yield 1.92 percent, up from 1.87 percent on Friday. The 10-year note’s yields have fallen from a 1-1/2-month high of 2.00 percent on Wednesday. (Editing by Lisa Von Ahn)

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