Bond Report: Short-term Treasury yields tumble as rate-hike expectations fade

Treasury prices surged Tuesday, leading yields to tumble, after a report indicated that the services side of the U.S. economy grew in August at its slowest pace since 2010, suggesting the Federal Reserve might be forced to stand pat on interest rates in the near future.

Yield declines were most pronounced at the short end of the maturity spectrum, which is the most sensitive to changes in the Fed-funds rate. Yields at the short end fell by the most in over two months. In longer-dated bonds, yields also fell, with the 10-year benchmark Treasury yield reaching its lowest level in two weeks.

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