U.S. bonds rose on Tuesday after data from the Institute for Supply Management revealed that the services sector expanded by 5.3 percent during the month of February, according to its non-manufacturing index.
According to Larry Milstein, head of government and agency trading at R.W. Pressprich & Co, bond investors are basically taking a wait-and-see approach with respect to interest rates before making any moves.
“The Fed’s said what they have to say, and now they’re sitting back and watching the data,” said Milstein.
Last week, Federal Reserve Chairman Jerome Powell said that “crosscurrents and conflicting signals” are warranting a patient approach with respect to interest rate policy.
In a prepared testimony to Congress, Powell said that domestic and global developments have “along with ongoing government policy uncertainty, warranted taking a patient approach with regard to future policy changes.” Furthermore, Powell said that economic data will continue to be the primary driver in future Fed decisions, but will be more flexible with the inclusion of new data.
Fixed-income ETFs like the broad-based iShares Core US Aggregate Bond ETF (NYSEArca: AGG) and the Vanguard Total Bond Market ETF (NasdaqGM: BND) were relatively unchanged as of 1:30 p.m. ET.