U.S. Treasuries got off to a bad start to the week, slowly climbing back to November levels as fears of inflation dampened demand for U.S. debt.
Benchmark 10-year U.S. Treasury yields were near a year-to-date high of 4.20% hit earlier this month, climbing 3 basis points to 4.18% during Asian trade.
Many policymakers at the Fed remain adamant that much work remains to be done to bring inflation back below target.
Rising U.S. Treasury issuance also weighed on sentiment as the U.S. government grapples with mounting deficits.
Michael Wan, an analyst at Mitsubishi UFJ, said that the main theme in the market in the near future seems to be that people are paying more attention to the inflation risk from the recent rise in oil and commodity prices, as well as pricing the risk of economic recession.
The market tends to think that U.S. long-term bond yields will rise.
Even former debt king Bill Gross believes that U.S. debt is overvalued, estimating the fair value of 10-year U.S. debt at 4.5%.
