Treasury yields retreat from 2-yr highs ahead of Fed

Treasury yields retreated from more than 2-year highs reached on Monday as investors consider the possibility of Fed downplaying the urge to tighten policy at a faster pace. 

The yield on the 10-year Treasury note rose to 2.582% on Monday; the highest level since September 2014. At the time of writing, the yield was hovering around 2.468%. 

Meanwhile, the 2-yr yield, which mimics short-term rate hike expectations, traded around 1.145%. 

The consensus in the markets is that the Fed would hike rates by 25 basis points; a move that has been priced-in already. However, there is a possibility that the Fed may signal slower rate hikes in 2017 given the possibility that the President Elect Trump may under deliver. 

Moreover, the Fed policy is more dependent on fiscal policy rather than the incoming data.