investors assess the outlook for monetary policy

U.S. Treasury yields edged higher on Monday as investors pondered the Federal Reserve’s next interest rate decision and considered the outlook for the economy as a whole.

The benchmark 10-year Treasury note rose about 5 basis points to 3.532%. The 2-year Treasury yield traded around 3 basis points at 4.21%.

Yields and prices move in opposite directions. One basis point equals 0.01%.

Investors weighed future monetary policy decisions as uncertainty over whether the Fed would raise interest rates by 25 or 50 basis points at its next meeting on Jan. 31 and Feb. 1 lingered.

Fed speakers recently hinted at a potential slowdown in rate hikes to 25 basis points, with Fed Governor Christopher Waller say outright Friday that he would prefer a short hike.

Many investors are hoping the central bank will slow or pause rate hikes altogether this year. The pace of rate hikes announced by the Fed in its fight against high inflation has raised concerns about a possible recession.

As the week begins, investors are keeping a close eye on a busy earnings week and the Personal Consumption Expenditures Price Index on Friday.

The PCE, known as the Fed’s favorite inflation gauge, could heavily influence the central bank’s next policy move.

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