Ten-year Treasury Yields Stabilize Ahead of Key Inflation Data

U.S. bond yields experienced a slight uptick on Thursday morning, buoyed by data showing robust economic growth in the final quarter of last year and ongoing labor market stability.

Here’s the detailed breakdown of bond yield movements:

  • The yield on the 2-year Treasury increased by 4.6 basis points to 4.614% from Wednesday’s 4.568%.
  • The yield on the 10-year Treasury edged up by 2.2 basis points to 4.217% compared to Wednesday’s 4.195%.
  • The yield on the 30-year Treasury remained relatively steady at 4.363% versus Wednesday’s 4.358%.

What’s influencing these market shifts: In the latest U.S. economic data, the final reading of fourth-quarter growth was adjusted upward to 3.4% from the previous estimate of 3.2%, indicating unforeseen strength in the economy.

Ten-year Treasury Yields Stabilize Ahead of Key Inflation Data
Investors are wary as ambiguous data challenges confidence; rate cut expectations persist despite recent unsettling trends.

Similarly, initial jobless claims decreased marginally to 210,000 last week, indicating persistent strength in the labor market.

Market participants are also weighing the remarks made by Fed Governor Christopher Waller on Wednesday, where he underscored that recent raised inflation figures and robust job gains reinforce the perspective that there’s no immediate necessity to decrease interest rates.

Consequently, fed funds futures traders have marginally diminished the likelihood of a quarter-point rate cut by June, dropping to 60.3% from 63.7% the previous day, according to the CME FedWatch Tool. Nonetheless, they still predominantly anticipate three quarter-point cuts by December.

Anticipating the upcoming release, the February personal-consumption expenditures price index, a pivotal gauge of inflation for the Federal Reserve, is set to be revealed on Friday morning amid market closures for the holiday. Later in the morning, Fed Chairman Jerome Powell is slated to deliver remarks.

Ten-year Treasury Yields Stabilize Ahead of Key Inflation Data
Market reactions to February PCE data delayed until Monday; Will Compernolle notes investor preparedness amid uncertain economic climate.

Insights from market strategists: Will Compernolle, a macro strategist at FHN Financial in New York, highlighted that investors are poised to conclude a month characterized by uncertain data.

Despite expectations for multiple rate cuts this year remaining unchanged, recent data has eroded confidence in a smooth economic transition, reminiscent of the aftermath of the January FOMC decision.

Reaction to the February PCE data, disclosed during the holiday, will be deferred until Monday.

Michael Manua
Michael Manua
Michael, a seasoned market news expert with 29 years of experience, offers unparalleled insights into financial markets. At 61, he has a track record of providing accurate, impactful analyses, making him a trusted voice in financial journalism.
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