treasury yields rose wednesday to kick off june as investors awaited data on manufacturing activity and job openings and the fed begins to allow bonds to mature off its balance sheet yields on 2 and 10year treasury notes pulled back in may as a brutal bondmarket selloff relented breaking a string of five consecutive monthly yield increases for the 10year note and nine straight monthly rises for the 2year investors remain wary of inflation that continues to run at a hot pace though off its recent peak while also worrying about the ability of the federal reserve to get price pressures under control without sinking the economy atlanta fed president raphael bostic told marketwatch on tuesday he had recently suggested a possible september “pause” in rate increases because the market’s response to the fed’s shift to raising rates “was far stronger than what we’ve historically seen” exclusive fed’s bostic says idea of september pause is not tied to any looming market rescue this raises the possibility that the broader economy will respond quickly to the fed’s rate hikes as well bostic said he dismissed the suggestion however that any such pause could be construed in any way as a “fed put” or belief that the central bank would come to the rescue of markets the fed raised its key interest rate by 50 basis points or half a percentage point in may typically the fed moves in quarterpoint increments fed chair jerome powell has said that halfpoint moves are on the table at the central bank’s next two policy meetings fed gov christopher waller in a speech earlier this week continued to push for an extended series of aggressive rate increases saying that he supports lifting interest rates by half percentage point increments for several meetings until he sees signs that inflation is coming down meanwhile the fed will begin allowing bonds that mature to roll off its nearly 9 trillion balance sheet without replacing them beginning wednesday that begins the unwind of its balance sheet a process known as quantitative tightening see fed to begin quantitative tightening what that means for financial markets starting in june the fed will begin reducing its holdings of treasury securities agency debt and agency mortgagebacked securities by a combined 475 billion per month for the first three months after this the total amount to be reduced goes up to 95 billion a month with policy makers prepared to adjust their approach sp global’s final may purchasing managers index reading for the us manufacturing sector is due at 945 am while the institute for supply management’s may manufacturing index is set for 10 am data on april job openings and leavings is also due at 10 am along with a look at april construction spending the fed’s beige book report on economic conditions is set for release at 2 pm st louis fed president james bullard is due to speak at 1 pm the may jobs report on friday is expected to be the key economic data release of the week “treasury yields are off the lows and momentum has shifted in favor of further weakness in the runup to friday’s employment report” said ian lyngen and benjamin jeffery rates strategists at bmo capital markets in a note “while the weekly charts remain constructive in the mediumterm the ability of risk assets to retain a portion of last week’s bounce has instilled a degree of solace in the investment outlook and implies the fed still has room to followthrough on its stated path of normalization before risking a surge tighter in financial conditions at least for now” they wrote