U.S. Treasury yields steady ahead of key U.S. inflation data releases
U.S. Treasury yields showed little movement in early trading Thursday as investors braced for a few key data releases that will shed more light on the evolving inflation environment and interest rate outlook.
yield on 10-year US Treasury The rating – an indicator of government borrowing – remained steady at 4.2872%. Meanwhile the payoff 2 year Treasury The bond, which is generally more sensitive to short-term Federal Reserve interest rate decisions, fell about 1 basis point to 3.7832%.
longer dated 30-year Treasury bond Its yield remained steady at 4.8806%.
One basis point is equal to 0.01%, or 1/100 of 1%, and yields and prices move in opposite directions.
Tuesday night’s ceasefire agreement between the United States and Iran sent energy prices lower Wednesday as investors flocked to U.S. Treasuries as they increased bets on the potential for a Fed interest rate cut. But tensions remain, with the ceasefire becoming increasingly fragile and oil prices rising on Thursday.
Traders are currently pricing the possibility of a rate cut by the end of the year at close to 25%, according to CME FedWatch tool after the possibility of a rate cut increased on Wednesday.
Investors’ attention now turns to a series of important domestic data that will be published later.
The Commerce Department will release the latest personal consumption expenditures price index for February before the start of the Middle East conflict. The core PCE price index, the Fed’s preferred gauge of underlying inflation in the U.S. economy, stood at 0.4% in January, and consensus expectations point to a 0.4% reading for February.
Minutes from the Fed’s March meeting showed that policymakers were open to future interest rate hikes if inflation continues to exceed 2%, while emphasizing the need to be nimble.
Other data expected to be released later include the fourth-quarter GDP growth rate, which was 4.4% in the previous period, as well as monthly personal income and expenditure data for February.
