MW Treasury yields decline toward 1-month lows as expectations for Fed rate cuts mount
By Joseph Adinolfi
Treasury yields declined toward their lowest levels in nearly a month on Monday as hopes for multiple Federal Reserve interest-rate cuts later this year helped boost demand for bonds.
Price action
The yield on the 2-year Treasury BX:TMUBMUSD02Y fell 1 basis point to 4.80% on Monday. Bond yields move inversely to prices. The yield on the 10-year Treasury BX:TMUBMUSD10Y shed 2 basis points to 4.49%. The yield on the 30-year Treasury BX:TMUBMUSD30Y fell by 2 basis points to 4.65%.
Market drivers
Bond traders took a more optimistic tack on Monday, betting that last week's weaker-than-expected jobs report and dovish rhetoric from Fed Chair Jerome Powell had boosted the chances for multiple Fed rate cuts before year's end.
As of early Monday in New York, interest-rate futures traders were pricing in two rate cuts before the end of the year, a notable shift from one week ago, when expectations pointed toward one cut, according to the CME's FedWatch tool.
"People are keen to get into the market and capture the yield before the Fed begins cutting rates," said Robert Tipp, chief investment strategist and head of global bonds at PGIM Fixed Income, during an interview with MarketWatch.
Looking ahead, traders face a relatively quiet week, with no top-tier economic data expected. As such, bond traders focus will be on Treasury auctions, including sales of $58 billion in three-year notes on Tuesday, $42 billion of 10-year notes on Wednesday, and $25 billion of 30-year bonds on Thursday.
-Joseph Adinolfi
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May 06, 2024 08:30 ET (12:30 GMT)
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