New York

FOR bond traders, the challenge of gauging the outlook for US growth and yields is only growing as the partial government shutdown crimps the flow of economic data and statistics on market positioning.

Ten-year Treasury yields appear to be settling into a range after rising last week for the first time since mid-December. The market is now pricing in little movement this year by the Fed, after officials' calming pronouncements that they'd be patient about adjusting policy. Expectations have swung since early January, when bets were building that the central bank's next step would be a cut.

Amid a dearth of top tier-data - some delayed with President Donald Trump and Democratic Congressional leaders at a standoff over funding - and little supply ahead, global events and Fedspeak may drive bond prices. The fate of trade talks between the US and China and Brexit developments are also on traders' radar. Among key economic data scheduled for this week that traders may not get: retail sales and housing starts.

"We have heard a lot from the Fed, so we have a better handle on their position" on monetary policy, said Brian Edmonds, head of interest-rate trading at Cantor Fitzgerald in New York. "But trying to get a handle on whether the economy is slowing or speeding up is going to be a little more difficult." Macroeconomic Advisers by IHS Markit lowered its forecasts for fourth- and first-quarter growth, each by 0.1 percentage point, on the assumption the shutdown lasts three weeks.

Michael Franzese, head of fixed-income trading at broker-dealer MCAP LLC, says with potential knock-on effects from the shutdown and global risks, investors are only making short-term rates wagers.

"There are a lot of things hanging in the balance now," Mr Franzese said. "So investors aren't making long-term bets." The closures since Dec 22 have also made it harder to assess speculators' bias in Treasuries. That's because the US Commodity Futures Trading Commission has been affected, with no positioning data released since Dec 21.

Those figures covered the week through Dec 18, when the 10-year note yielded 2.82 per cent, compared with 2.7 per cent now. In that pre-shutdown update, hedge funds and other large speculators were net bearish 10-year Treasuries, although they'd trimmed those bets from a record.

Nils Overdahl, a senior portfolio manager at New Century Advisors, which oversees about US$2.2 billion, said he's struggling to fill in the gaps left by the CFTC data.

"We are looking at other sentiment indicators and trying to get positioning reports from banks," he said. "But even then, you have to take this information with a grain of salt." BLOOMBERG