US Treasury yields declined moderately as market participants are preparing for the publication of US GDP data, as well as analyzing statements by Fed policymakers in the hope of getting any clues about the prospects for monetary policy.
The yield on 5-year Treasury bonds decreased by 5.5 basis points, reaching 3.209%, while the yield on 30-year bonds was 3.272% (-4.0 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, fell by 2.5 basis points to 3.099%, while the yield on 10-year bonds fell to 3.155% (-5.2 basis points).
Overall, investors continue to show concern about the recession amid the aggressive tightening of the Fed's policy. Today, the president of the Federal Reserve Bank of Cleveland, Loretta Mester, said that if economic conditions do not change by the time of the July Fed meeting, she will vote for an increase in interest rates by 0.75%. Earlier this month, the Fed raised the rate by 0.75% - the biggest increase since 1994 - to combat high inflation, which has reached a 40-year high.
Mester said she would assess supply and demand conditions in the coming weeks before the July meeting to determine the preferred path of monetary policy tightening.
Later today (at 13:00 GMT), Fed Chairman Jerome Powell will give a speech. Last week, Powell acknowledged that a sharp rate hike could lead to a recession in the US economy, but reiterated the Fed's commitment to curbing inflation.
As for the US data, today at 12:30 GMT the final GDP report for the 1st quarter will be published. Economists expect GDP to contract by 1.5% after rising 6.9% in the fourth quarter.