Investors analyze U.S. Treasury yields amidst economic data scrutiny

Fed Rate Cut Concerns Dissipate as Treasury Yields Rise, Manufacturing Surges in the US

As the Treasury yield continues its upward trend, traders are reevaluating the likelihood of a June rate cut by the Federal Reserve. On Tuesday, the 10-year Treasury note yield increased by more than 3 basis points to 4.361%, reaching its highest level since November 28 and briefly surpassing 4.4%. Meanwhile, the 2-year Treasury note yield decreased nearly 3 basis points to 4.691%.

Yields and prices move in opposite directions, with one basis point equaling 0.01%. The latest movement in Treasury yields followed news that manufacturing in the U.S. expanded for the first time in 17 months. The Institute for Supply Management reported that the ISM manufacturing index rose to 50.3, up from 47.8 in February and surpassing the Dow Jones consensus estimate of 48.1. A reading above 50 indicates growth as it measures the percentage of companies reporting expansion against contraction.

Investors are now more cautious about the direction of rate cuts in the future following this unexpected return of manufacturing growth in the U.S., as market odds for a June rate cut have decreased to around 58.8% from about 70% a week ago according to fed futures trading. Dutch bank ING noted that markets interpreted this growth as reducing the likelihood of significant Fed rate cuts, highlighting how economic data can impact market expectations and pricing for interest rates.

Last month, the U.S central bank left interest rates unchanged for the fifth consecutive time, as anticipated, maintaining its benchmark overnight borrowing rate in a range of 5.25%-5.5% and reiterating its expectation of three quarter-percentage point cuts by

Leave a Reply

Red Sox President Larry Lucchino, Who Led Team to Three World Series Championships, Passes Away at 78 Previous post From Baseball Titles to Modernizing Ballparks: Remembering Larry Lucchino’s Legacy as a Pioneer in MLB Execution and Development
What is causing the decline in health insurance stocks HUM, UNH, CI today? Next post Unexpected Medicare Advantage Rate Decision Causes Health Insurance Stocks to Plummet, Shaking up the Stock Market