2017.10.1623:48:00UTC+00U.S. Yields Jump as Fed’s Yellen Reaffirms Rate Hike Possibility

Yields on U.S. Treasury yields rose after Federal Reserve Chairperson Janet Yellen's comments provided support to the possibility of another interest-rate hike in 2017. The bond markets were also focused on candidates being interviewed by U.S. President Donald Trump to lead the U.S. central bank as the process of choosing one appears to be almost finished.

The two-year Treasury note yield, which is responsive to changing outlook for monetary policy, rose 4 basis points to 1.542 percent, notching the biggest one-day increase since September 11.

However, the action for long-dated government bonds was more subdued, indicating traders' doubt of Yellen's view that inflationary measures would develop as planned. The 10-year Treasury yield advanced 3 basis points to 2.309 percent, while the yield on the 30-year bond advanced by a basis point to 2.823 percent.

On Sunday, Yellen restated her support for a gradual pace of rate hikes, and her perspective that tightness in labor markets would eventually show in the inflation rates. The Fed chief's comments came after a weaker-than-anticipated inflation reading on Friday. However, investors felt the disconnect between the weak economic data and the Fed's argument that the low inflation is temporary and is close to a inflection period.